Final answer:
Pension plan assets are recognized in an employer's accounts and financial statements as they represent the funds set aside for future pension benefits.
Step-by-step explanation:
When addressing which one of the following pension items is recognized in the employer's accounts and financial statements, the correct answer is (a) pension plan assets. Employers that provide pensions must recognize pension plan assets in their financial statements. These pension plan assets are investments and funds that the employer has set aside to pay future pension benefits to retirees, as indicated by the Economics of Social Safety Nets section, which explains that firms build up savings in a pension fund to pay out to retired workers.
Projected benefit obligation and unrecognized prior service costs are also associated with employer-sponsored pension plans, but are accounted for differently and may not be directly recognized on the balance sheet. Pension plan assets, on the other hand, are tangible items that are required to be included in the financial statements.