Question 1

Which of the following is $\underline{not}$ true regarding SFAS 158?

Accepted Answer

A)  It brought the overfunded and underfunded status of defined benefit plan to the footnotes of the balance sheet. 
B)  It required certain costs be charged to other comprehensive income. 
C)  It requires a credit to other pension income for amortized prior service costs. 
D)  An overfunded or underfunded amount for OPEBs must be shown as an asset or liability on the balance sheet. 
A)  It brought the overfunded and underfunded status of defined benefit plan to the footnotes of the balance sheet. 
B)  It required certain costs be charged to other comprehensive income. 
C)  It requires a credit to other pension income for amortized prior service costs. 
D)  An overfunded or underfunded amount for OPEBs must be shown as an asset or liability on the balance sheet. A

Question 2

Benefits in a defined benefit plan may be based on either career average or final average salary.

Accepted Answer

A) True 
 B)False  True

Question 3

SFAS No. 87 achieved greater uniformity in measuring accrued pension expense by mandating use of one actuarial method, the accumulated benefit method.

Accepted Answer

A) True 
 B)False  False

Question 4

Prior research studies have provided evidence that a firm's unfunded pension benefits are interpreted as if they are liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Explain in general terms how defined benefit pension plans are funded.

Accepted Answer

When benefits of a defined benefit plan

Question 6

What were the major effects of SFAS No. 106 on reporting for post-retirement benefits other than pensions?

Accepted Answer

SFAS No. 106 brought accrual accounting

Question 7

FASB Interpretation 3 was issued in response to the passage of ERISA.

Accepted Answer

A) True 
 B)False

Question 8

What was the main argument of ARB 36?

Accepted Answer

A) ERISA did not create a pension liability except in the likelihood of plan termination. 
B) The cost of providing pension benefits should be spread over the remaining service life of employees. 
C) Pension expense should be computed using any one of five acceptable accumulated benefit methods, regardless of cash contributions. 
D) The balance sheet should report unfunded vested benefits. 
A) ERISA did not create a pension liability except in the likelihood of plan termination. 
B) The cost of providing pension benefits should be spread over the remaining service life of employees. 
C) Pension expense should be computed using any one of five acceptable accumulated benefit methods, regardless of cash contributions. 
D) The balance sheet should report unfunded vested benefits.

Question 9

SFAS No. 106 requires a liability be recognized related to OPEB only if a legal obligation exists.

Accepted Answer

A) True 
 B)False

Question 10

Legal services and daycare benefits are not included in OPEBs.

Accepted Answer

A) True 
 B)False

Question 11

In calculating the service cost portion of pension expense, future salaries need not be estimated.

Accepted Answer

A) True 
 B)False

Question 12

Vesting refers to:

Accepted Answer

A) a qualifying period of pension plan membership that must be met before contributions are made by the employer. 
B) a qualifying period of pension plan membership that must be met before pension benefits legally exist. 
C) a qualifying period of pension plan membership after which benefits are received. 
D) a qualifying period of pension plan membership after which contributions may cease. 
A) a qualifying period of pension plan membership that must be met before contributions are made by the employer. 
B) a qualifying period of pension plan membership that must be met before pension benefits legally exist. 
C) a qualifying period of pension plan membership after which benefits are received. 
D) a qualifying period of pension plan membership after which contributions may cease.

Question 13

SFAS No. 87 presumes an explicit contract in calculating accrued pension expense.

Accepted Answer

A) True 
 B)False

Question 14

Vesting refers to a qualifying period of pension plan membership that must be met before contributions are made by the employer.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a true statement regarding the pension liability and pension expense recognition requirements of SFAS No. 87?

Accepted Answer

A) SFAS No. 87 presumes an explicit contract in calculating accrued pension expense. 
B) SFAS No. 87 uses an explicit contract view in requiring the recognition of a minimum pension liability. 
C) SFAS No. 87 may overestimate the pension liability by including future salary projections in the liability computation. 
D) SFAS No. 87 does not include future salary projections in the pension expense calculation. 
A) SFAS No. 87 presumes an explicit contract in calculating accrued pension expense. 
B) SFAS No. 87 uses an explicit contract view in requiring the recognition of a minimum pension liability. 
C) SFAS No. 87 may overestimate the pension liability by including future salary projections in the liability computation. 
D) SFAS No. 87 does not include future salary projections in the pension expense calculation.

Question 16

Which of the following is $\underline{not}$ a currently allowed practice related to pensions?

Accepted Answer

A) The use of cash balance plans 
B) Redistributing benefits away from older employees and shifting them to younger employees 
C) The raiding of overfunded pension plans by acquiring corporations 
D) Discretionary funding of defined benefit plans 
A) The use of cash balance plans 
B) Redistributing benefits away from older employees and shifting them to younger employees 
C) The raiding of overfunded pension plans by acquiring corporations 
D) Discretionary funding of defined benefit plans

Question 17

SFAS No. 87 was the first accounting standard to argue that the cost of providing pension benefits should be spread over the remaining service life of employees.

Accepted Answer

A) True 
 B)False

Question 18

For all defined contribution plans, funding is shared by the employer and employee.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is $\underline{not}$ a true statement regarding SFAS No. 35?

Accepted Answer

A) It established accounting standards for the measurement and reporting of plan assets and plan obligation. 
B) It was a landmark standard because it defined the pension plan as a new entity, separate, and distinct from the sponsoring company. 
C) It defined plan obligations as accumulated benefits, both vested and unvested. 
D) It required information about the sponsor's obligations to be reported as a note in the sponsor's financial statements. 
A) It established accounting standards for the measurement and reporting of plan assets and plan obligation. 
B) It was a landmark standard because it defined the pension plan as a new entity, separate, and distinct from the sponsoring company. 
C) It defined plan obligations as accumulated benefits, both vested and unvested. 
D) It required information about the sponsor's obligations to be reported as a note in the sponsor's financial statements.

Question 20

SFAS No. 112 applies to both inactive and active employees who have not yet retired.

Accepted Answer

A) True 
 B)False

Which of the following is $\underline{not}$ true regarding SFAS 158?

Benefits in a defined benefit plan may be based on either career average or final average salary.

SFAS No. 87 achieved greater uniformity in measuring accrued pension expense by mandating use of one actuarial method, the accumulated benefit method.

Prior research studies have provided evidence that a firm's unfunded pension benefits are interpreted as if they are liabilities.

Explain in general terms how defined benefit pension plans are funded.

What were the major effects of SFAS No. 106 on reporting for post-retirement benefits other than pensions?

FASB Interpretation 3 was issued in response to the passage of ERISA.

What was the main argument of ARB 36?

SFAS No. 106 requires a liability be recognized related to OPEB only if a legal obligation exists.

Legal services and daycare benefits are not included in OPEBs.

In calculating the service cost portion of pension expense, future salaries need not be estimated.

Vesting refers to:

SFAS No. 87 presumes an explicit contract in calculating accrued pension expense.

Vesting refers to a qualifying period of pension plan membership that must be met before contributions are made by the employer.

Which of the following is a true statement regarding the pension liability and pension expense recognition requirements of SFAS No. 87?

Which of the following is $\underline{not}$ a currently allowed practice related to pensions?

SFAS No. 87 was the first accounting standard to argue that the cost of providing pension benefits should be spread over the remaining service life of employees.

For all defined contribution plans, funding is shared by the employer and employee.

Which of the following is $\underline{not}$ a true statement regarding SFAS No. 35?

SFAS No. 112 applies to both inactive and active employees who have not yet retired.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

Postulates, Principles, and Concepts

The Search for Objectives

The Fasbs Conceptual Framework

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Leases

Intercorporate Equity Investments

Filters

Exam 15: Pensions and Other Postretirement Benefits

Which of the following is not‾\underline{not}not​ true regarding SFAS 158?

Benefits in a defined benefit plan may be based on either career average or final average salary.

SFAS No. 87 achieved greater uniformity in measuring accrued pension expense by mandating use of one actuarial method, the accumulated benefit method.

Prior research studies have provided evidence that a firm's unfunded pension benefits are interpreted as if they are liabilities.

Explain in general terms how defined benefit pension plans are funded.

What were the major effects of SFAS No. 106 on reporting for post-retirement benefits other than pensions?

FASB Interpretation 3 was issued in response to the passage of ERISA.

What was the main argument of ARB 36?

SFAS No. 106 requires a liability be recognized related to OPEB only if a legal obligation exists.

Legal services and daycare benefits are not included in OPEBs.

In calculating the service cost portion of pension expense, future salaries need not be estimated.

Vesting refers to:

SFAS No. 87 presumes an explicit contract in calculating accrued pension expense.

Vesting refers to a qualifying period of pension plan membership that must be met before contributions are made by the employer.

Which of the following is a true statement regarding the pension liability and pension expense recognition requirements of SFAS No. 87?

Which of the following is not‾\underline{not}not​ a currently allowed practice related to pensions?

SFAS No. 87 was the first accounting standard to argue that the cost of providing pension benefits should be spread over the remaining service life of employees.

For all defined contribution plans, funding is shared by the employer and employee.

Which of the following is not‾\underline{not}not​ a true statement regarding SFAS No. 35?

SFAS No. 112 applies to both inactive and active employees who have not yet retired.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

Postulates, Principles, and Concepts

The Search for Objectives

The Fasbs Conceptual Framework

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Leases

Intercorporate Equity Investments

Filters

Which of the following is $\underline{not}$ true regarding SFAS 158?

Which of the following is $\underline{not}$ a currently allowed practice related to pensions?

Which of the following is $\underline{not}$ a true statement regarding SFAS No. 35?