The Journal Entry a Company Uses to Record Fully Funded

question 156

Multiple Choice

The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is

• A) debit Salary Expense; credit Cash
• B) debit Pension Expense; credit Unfunded Pension Liability
• C) debit Pension Expense; credit Unfunded Pension Liability and Cash
• D) debit Pension Expense; credit Cash

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Definitions:

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overheads - in the cost of a product.

Net Operating Income

This is the total profit of a business after operating expenses are subtracted from gross revenue but before taxes and interest expenses are deducted.

Absorption Costing

A method of product costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.

Product Costs

Costs that are considered to be directly associated with the production of goods or services, including direct materials, direct labor, and manufacturing overhead.