Question

In a defined-benefit plan, a formula is used that:______. a. defines the benefits that the employee will receive at the time of retirement. b. requires that pension expense and the cash funding amount be the same. c. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. d. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee.

Answer 1

Answer:

defines the benefits that the employee will receive at the time of retirement.

Explanation:

A defined benefit plan is one in which the employer promises to make a predetermined amount to the employee on retirement. It is based on a formula that considers the salary history, length of service, and age of employee.

The formula to be used in calculating this type of benefit is know beforehand, but the amount to be paid is not known. It is calculated at employee retirement and is based on the factors listed above.