Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is true of defined contribution plans?

The plan's liability is reported on the employer's balance sheet.

The employer guarantees a specific retirement benefit amount to employees.

Investment risk is borne by the employer.

The employer's obligation is limited to making specified contributions to the plan.

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Verified step by step guidance

Understand the concept of a defined contribution plan: In this type of retirement plan, the employer's obligation is limited to making specified contributions to the employee's retirement account. The employer does not guarantee a specific retirement benefit amount.

Compare defined contribution plans with defined benefit plans: In a defined benefit plan, the employer guarantees a specific retirement benefit amount, and the investment risk is borne by the employer. In contrast, in a defined contribution plan, the investment risk is borne by the employee.

Analyze the employer's liability: For defined contribution plans, the employer's liability is limited to the contributions specified in the plan agreement. This liability is not reported on the employer's balance sheet as a long-term obligation.

Evaluate the investment risk: In defined contribution plans, the investment risk is transferred to the employee. The employee's retirement benefit depends on the performance of the investments made with the contributions.

Conclude the correct answer: Based on the characteristics of defined contribution plans, the correct statement is: 'The employer's obligation is limited to making specified contributions to the plan.'