Which of the Following Is Not True Regarding the Accounting

question 11

Multiple Choice

Which of the following is not true regarding the accounting for defined contribution plans?

• A)When pension assets equal pension liabilities and the expected rate of return on pension investments equals the discount rate used to compute the projected benefit obligation, the amounts offset each other.
• B)When the interest cost exceeds the expected return on pension investments, either employer contributions or future earnings on pension plan investments must make up the difference.
• C)Computing pension expense (or credit) using the expected return (not the actual return) rests on the view that pension plans should take a long-term perspective and generate earnings from investments based on a long-term expected rate of return.
• D)Annual deviations from the long-term expected rate of return should flow through to net income as they occur.
• E)Recognizing service cost as an increase in the pension expense parallels inclusion of wage and salary costs as an expense.

---

Definitions:

Duty of Loyalty

An obligation of employees or directors to act in the best interest of their company or shareholders.

Corporate Interests

Refers to the objectives and goals that are of prime importance to a corporation, typically aimed at maximizing profitability and sustainability.

Stakeholder Perspective

An approach to decision-making and governance that takes into account the interests and concerns of all those affected by a business's operations, including employees, customers, suppliers, community members, and shareholders.

Government Regulators

Authorities or agencies responsible for enforcing laws, regulations, and ensuring compliance within specific industries or sectors.