Which of the Following Statements Is Correct

question 4

Multiple Choice

Which of the following statements is correct?

• A) Minimum (corridor)amortization of net unrecognized gain or loss is not allowed for postretirement benefit plans.
• B) Immediate recognition of gains and losses is allowed for postretirement benefit plans but not for pension plans.
• C) Immediate recognition of gains and losses is allowed for pension plans but not for postretirement benefit plans.
• D) Minimum (corridor)amortization of net unrecognized gain or loss is the only amortization method allowed for postretirement benefit plans.

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Definitions:

Period Costs

Costs that are not directly tied to the production of goods and are expensed in the accounting period they are incurred, such as sales and administrative expenses.

Prime Cost

The combined costs of raw materials and direct labor involved in the production of a product.

Manufacturing Overhead

Refers to all the indirect costs associated with the production process, such as utilities, maintenance, and salaries of supervisors that are not directly tied to the creation of a product.

Administrative Costs

Expenses related to the general operation of a business, including salaries of executive staff, office supplies, and utilities.