Gov't & NFP Ch. 8 Exam Questions with Correct Answers Latest Update 2026/2027
If a government participates in a defined contribution pension plan, which of the following
always will be true?
a. The government will report expenditures/expenses for pension contributions.
b. The government will sponsor and maintain one or more pension trust funds.
c. The government will record its pension transactions based on actuarial values.
d. The government will have no pension liability. - Answers A
A government that participates in a defined contribution plan will report an expenditure or
expense for its contributions to the plan. It will also record a liability and a pension expenditure
or pension expense for any required contributions that are due and payable but unpaid at year
end. Defined contribution plans require a government to make contributions that are defined.
Actuaries are not needed to make a contribution calculation.
Which of the following is not a fiduciary fund?
a. Pension Trust Fund
b. Permanent Fund
c. Private-Purpose Trust Fund
d. Custodial Fund - Answers B
The four types of fiduciary type funds are Pension Trust Funds, Investment Trust Funds, Private-
Purpose Trust Funds, and Custodial Funds.
Which of the following is not a characteristic of a defined benefit pension arrangement?
a. Benefits are based on actual contributions plus amounts earned on the contributions
b. Benefits are linked to the number of years worked by the employee
c. Benefits are based on a formula that considers salaries earned by the employee
, d. Benefits, rather than contributions, are guaranteed by the employer - Answers A
With a defined benefit arrangement, the employer promises to provide the retiree a defined
future benefit over a future time period. The defined benefit pension retiree formula includes
final average salary of an employee and number of years of service. With a defined contribution
plan, a government typically contributes a certain percentage of an employee's salary to an
account in the employee's name.
Which of the following type of pension plans results in all the employers participating in the plan
being liable for the accumulated liabilities of the plan?
a. Sole-employer plan
b. Multiple-employer plan
c. Defined contribution plan
d. Cost-sharing plan - Answers D
With cost-sharing plans, employers share the accumulated net assets of the plan and are liable
for the accumulated liabilities to employees.
The net pension liability is:
a. The unfunded annual required contribution
b. The pension benefit that is due to retirees during the next fiscal year
c. The present value of projected benefit payments that is attributable to employees' past
periods of service, less the related pension plan's net position
d. The actuarial value of a pension plan's assets minus the actuarial present value of projected
retiree pension benefits - Answers C
The net pension liability is the total pension liability less the related pension plan's net position.
The total pension liability is the present value of projected benefit payments that is attributable
to employees' past periods of service.
If a government participates in a defined contribution pension plan, which of the following
always will be true?
a. The government will report expenditures/expenses for pension contributions.
b. The government will sponsor and maintain one or more pension trust funds.
c. The government will record its pension transactions based on actuarial values.
d. The government will have no pension liability. - Answers A
A government that participates in a defined contribution plan will report an expenditure or
expense for its contributions to the plan. It will also record a liability and a pension expenditure
or pension expense for any required contributions that are due and payable but unpaid at year
end. Defined contribution plans require a government to make contributions that are defined.
Actuaries are not needed to make a contribution calculation.
Which of the following is not a fiduciary fund?
a. Pension Trust Fund
b. Permanent Fund
c. Private-Purpose Trust Fund
d. Custodial Fund - Answers B
The four types of fiduciary type funds are Pension Trust Funds, Investment Trust Funds, Private-
Purpose Trust Funds, and Custodial Funds.
Which of the following is not a characteristic of a defined benefit pension arrangement?
a. Benefits are based on actual contributions plus amounts earned on the contributions
b. Benefits are linked to the number of years worked by the employee
c. Benefits are based on a formula that considers salaries earned by the employee
, d. Benefits, rather than contributions, are guaranteed by the employer - Answers A
With a defined benefit arrangement, the employer promises to provide the retiree a defined
future benefit over a future time period. The defined benefit pension retiree formula includes
final average salary of an employee and number of years of service. With a defined contribution
plan, a government typically contributes a certain percentage of an employee's salary to an
account in the employee's name.
Which of the following type of pension plans results in all the employers participating in the plan
being liable for the accumulated liabilities of the plan?
a. Sole-employer plan
b. Multiple-employer plan
c. Defined contribution plan
d. Cost-sharing plan - Answers D
With cost-sharing plans, employers share the accumulated net assets of the plan and are liable
for the accumulated liabilities to employees.
The net pension liability is:
a. The unfunded annual required contribution
b. The pension benefit that is due to retirees during the next fiscal year
c. The present value of projected benefit payments that is attributable to employees' past
periods of service, less the related pension plan's net position
d. The actuarial value of a pension plan's assets minus the actuarial present value of projected
retiree pension benefits - Answers C
The net pension liability is the total pension liability less the related pension plan's net position.
The total pension liability is the present value of projected benefit payments that is attributable
to employees' past periods of service.
