Question

2.6. Which of the following statements is false? A) Prior service cost is amortized over the average remaining service life of the employees. B) Net gains/losses from a defined benefit pension plan have to be amortized over the average remaining service life of the employees. C) The amortization of prior service cost increases pension expense. D) The amortization of prior service cost decreases net income. 2.7. On October 1, the board of directors declares a cash dividend, to be paid October 30. The date of record is October 15. Which of the following investors is NOT entitled to receive the declared dividend? A) Anna who sells shares on October 16. B) Barry who purchases shares on October 13. C) Chris who purchases shares on October 15. D) Doug who sells shares on October 15. 2.8. Which of the following is not a potential component of pension expense? A) expected return on plan assets. B) amortization of prior service cost. C) amortization of gains and losses from a defined benefit pension plan. D) Retiree benefits paid. 2.9. The balance of the plan assets can change due to: A) periodic service cost, accrued interest, revised estimates, plan amendments, and the payment of benefits. B) periodic service cost, accrued interest, revised estimates, employer contributions, and the payment of benefits. C) periodic service cost, employer contributions, and the payment of benefits. D) investment returns, employer contributions, and the payment of benefits.

Answer 1

2.6 D The amortization of prior service cost decreases net income

2.7 D. Dough who sells share on Oct 15

2.8 D. Retired benefits paid. is not a potential component of pension expense

2.9 D. Investment returns, employer contributions, and the payment of benefits