Question

If sick pay benefits accumulate but do not vest, accrual is permitted but not required.

1) True
2) False

Answer 1

The statement is true; employers are not required to accrue sick pay benefits that do not vest. They may choose to accrue if the employees are entitled to accumulated benefits upon termination.

Step-by-step explanation:

The statement, If sick pay benefits accumulate but do not vest, accrual is permitted but not required, is True. In accounting, particularly under the Generally Accepted Accounting Principles (GAAP), employers do not have to accrue sick pay benefits that do not vest or are not expected to be paid. However, if the benefits do accumulate and an employee can receive payment for these accumulated but not vested benefits upon termination, then the employer may choose to accrue the expense related to these benefits.