Characteristics of Profit-Sharing Plans Include All of the Following with the Exception

question 102

Multiple Choice

Characteristics of profit-sharing plans include all of the following with the exception of

• A)a predetermined formula is used to allocate employer contributions to individual employees and to establish benefit payments.
• B)forfeitures of benefits under the plan may be reallocated to the remaining participants.
• C)the company must make contributions to the plan if it has profits during the year.
• D)annual employer contributions are not required,but substantial,recurring contributions must be made to satisfy the requirement that the plan be permanent.

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Definitions:

Checking Account

A bank account that allows easy access to funds, typically through checks or electronic transactions, and is used for day-to-day expenses.

Payee

A person or entity who is to receive money.

Drawer

In banking and finance, the person or entity that writes a check or draft instructing a drawee to pay a specified sum to a third party.

Negotiable

Capable of being transferred from one person to another through endorsement or delivery, often used in the context of negotiable instruments like checks.