Question

In accounting for a pension plan, any difference between the pension cost charged to expense and the payment into the fund should be reported as

a. an offset to the liability for prior service cost
b. accrued or prepaid pension cost
c. an accrued actuarial liability
d. a charge or credit to unrealized appreciation and depreciation

Answer 1

The difference between pension cost charged to expense and payment into the pension fund is reported as accrued or prepaid pension cost, reflecting the timing differences in expense recognition and cash payments in pension accounting.

Step-by-step explanation:

In accounting for a pension plan, any difference between the pension cost charged to expense and the payment into the fund should be reported as accrued or prepaid pension cost. This reflects the timing differences between when pension costs are incurred and when the payments to fund these costs are made. The accrual accounting method is used to match expenses with the periods in which they are incurred, rather than the period in which cash is paid out.