Which of the following is not a characteristic of a defined-contribution pension plan? • a. An appropriate funding pattern must be established to ensure that enough funds will be available at retirement to meet the benefits promised. • b. The employer's contribution each period is based on a formula. • c. The benefit of gain or the risk of loss from the assets contributed to the pension fund are borne by the employee. • d. The accounting for a defined-contribution plan is straightforward and uncomplicated.
Added by Muhammad Faris S.
Step 1
An appropriate funding pattern must be established to ensure that enough funds will be available at retirement to meet the benefits promised. - This is a characteristic of a defined-benefit pension plan, not a defined-contribution plan. In a defined-contribution Show more…
Show all steps
Your feedback will help us improve your experience
Ronald Prasad and 90 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as • a. plan assets. • b. pension asset/liability. • c. defined benefit obligation • d. an offset to the liability for past service cost.
Sanchit J.
Cash balance plans are the same as traditional defined benefit plans with respect to the following, EXCEPT: A. Pension Benefit Guarantee Corporation coverage. B. Prohibition on withdrawals during employment. C. Employee retirement benefits are not directly related to the investment return on plan assets. D. Integration with Social Security is permitted. E. Employer promises are expressed in terms of a monthly pension.
Aparna S.
All the following are correct statements regarding the tax advantage of qualified pension plans EXCEPT: A. Investment income earned on pension plan assets is tax deferred. B. An employee may be in a lower tax bracket when distribution is received. C. Under limited circumstances, distributions from pension plans may be taxed on a favorable basis. D. There is no current income tax to the employee on employer contributions to a pension plan. E. An unlimited business expense deduction is allowable on employer contributions to a pension plan.
Gio M.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD