1.When considering the major differences between a defined contribution and a defined benefit pension plan, which of the following statements is most accurate? A) The future obligations of a corporation to its employees with a defined contribution pension plan can be categorized as either a pay-related or non-pay-related. B) Among the different types of pension plans, accounting for a pay-related defined benefit plan is the most complicated because of the required actuarial assumptions. C) Employees have more control over investment decisions and bear less short-fall risk at the time of retirement with a defined obligation pension plan. D) A company with a defined contribution plan will report on its balance sheet the net difference between the value of the pension fund assets and the value of the pension liability. The correct answer was B) Three actuarial assumptions (discount rate, expected increase in employee compensation and the expected return on plan assets) must be estimated to project the value of the corporation’s pension liability today. Subtle changes to any of the three assumptions can drastically change the estimated liability. 2.Prime Bank promises each of its full-time employees that it will pay them $100 a month after retirement for every completed year of service. This type of pension plan is called a: A) non-pay-related defined contribution plan. B) pay-related defined benefit plan. C) pay-related defined contribution plan. D) non-pay-related defined benefit plan. The correct answer was D) The promised benefit is not related to either an employee’s current or future salary, and the future benefit has been defined upfront. 3.The financial statements of Pace Industries issued over the past five years show a progressively increasing net difference between the value of its pension fund and the projected future pension liability on the balance sheet. Pace most likely offers which of the following types of pension plans to its employees? A) A 401(k) plan. B) A defined benefit plan. C) A defined contribution plan. D) A cash balance plan. The correct answer was B) A company with a defined benefit plan will fund a portfolio structured to fulfill future pension obligations. The difference between the current value of the assets and the projected future liability is shown as a net amount on the balance sheet.
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发表于 2008-4-16 18:14
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