Advanced Accounting Chapter 8 exam GRADED A+

Advanced Accounting Chapter 8 exam GRADED A+ Does a government that offers pension benefits to its employees necessarily maintain a Pension Trust Fund? Explain - answerNo. A government can offer benefits to its employees by participating in an external pension plan. In such cases, the government does not use a pension trust fund. Distinguish between a defined benefit pension plan and a defined contribution pension plan. - answerA defined benefits plan is a plan that specifically identifies the formula that will be used to calculate future pension benefits for employees as long as they live. A defined contribution pension plan is a plan that specifically identifies the formula that determines the amount the governmental unit will contribute into a fund that a retiree must accumulate to provide for his/her own retirement. Under defined benefit plans the governmental unit is committed to make payments to the retiree over his/her life after retirement. Under defined contribution plans, the government has no liability except for its required contribution. What is an actuary? What is the actuary's role in pension administration? - answerActuaries have special expertise in calculating the long-term cost of risk. Actuaries are closely associated with the operations of pension plans. Distinguish between a pension contribution and pension cost. - answerA pension contribution is the actual amount of cash paid by an employer government to a pension plan for the benefit of the government's employees. Pension cost is an actuarially-determined amount that represents the economic cost to a government of providing pension benefits, without regard to the timing of specific contributions.