Question

At the government-wide level, the amount reported as pension expense each year should be the same as the:

A) Annual pension cost.
B) Net pension obligation.
C) Actual contribution made for the year.
D) Annual required contribution.

Answer 1

At the government-wide level, the pension expense each year should match the Annual Pension Cost, which is part of the accounting for defined benefit pension plans that guarantee fixed payments to retirees.

Step-by-step explanation:

At the government-wide level, the amount reported as pension expense each year should correspond to the Annual Pension Cost. This cost accounts for the company's obligation to pay pensions, which are a type of retirement plan. Pensions, as defined benefit plans, promise fixed annual payments to retirees and are funded by the employer's pension fund. However, these types of plans are increasingly replaced by defined contribution plans, such as 401(k)s and 403(b)s, where the employer makes regular contributions to the employee's retirement account.