When Accounting for Defined Benefit Pensions, the Net Pension Liability

question 21

Multiple Choice

When accounting for defined benefit pensions, the net pension liability for employees of governmental activities is:

• A) Reported in the government-wide statements.
• B) Reported in the governmental fund-basis statements.
• C) Both A and B.
• D) Neither A nor B.

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Definitions:

Noncash Investing

A financial activity that involves acquiring or disposing of assets without the immediate use of cash, such as through trading one asset for another or completing transactions through financing arrangements.

Fixed Assets

Long-term assets purchased for operating the business, not expected to be converted to cash within a year.

Investing Activities

Deals that include buying and selling assets with long-term value and investments outside of cash equivalents.

Operating Activities

Business actions related directly to the production and delivery of goods and services, reflected in the cash flow statement.