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FIRST PUBLISH OCTOBER 2024
Finance 470- MC Exam Practice
Questions and Answers
The net deferrals are included in the balance sheet as part of:
A. assets.
B. current liabilities.
C. shareholders' equity.
D. long-term liabilities - Ans:✔✔-B
Pension intensity can be measured by expressing the pension plan assets and the pension obligation
separately as:
A. a percentage of company's total liabilities.
B. a percentage of company's total assets.
C. a percentage of company's net income.
D. a percentage of company's shareholders' equity. - Ans:✔✔-B
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FIRST PUBLISH OCTOBER 2024
Which of the following is not an actuarial assumption underlying the computation of the pension
obligation?
A. Employee turnover
B. Life expectancy
C. Interest rate
D. Service cost - Ans:✔✔-D
The plan is said to be underfunded, if:
A. the pension obligation is more than the asset value.
B. the pension obligation is less than the asset value.
C. the pension obligation is equal to the asset value.
D. none of the above. - Ans:✔✔-A
Synthetic leases may achieve all of the following benefits to the borrower except:
A. window dress the balance sheet.
B. increase cash flow.
C. reduce tax expense on the income statement.
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FIRST PUBLISH OCTOBER 2024
D. increase net income. - Ans:✔✔-C
If Harms had decreased its compensation growth rate to 4.5% in 2006, the effect would have been:
A. an increased ABO.
B. an increased PBO.
C. a decreased ABO.
D. a decreased PBO. - Ans:✔✔-D.
If a company increases its expected return on plan assets this year, the effect would be to:
I. increase plan assets.
II. decrease PBO.
III. decrease pension expense.
IV. decrease minimum liability.
A. I, II and IV
B. I and IV
C. III and IV
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FIRST PUBLISH OCTOBER 2024
D. III only - Ans:✔✔-D
Which of the following is not a component of pension expense?
A. Service cost
B. Interest cost
C. Actual return on plan assets
D. Expected return on plan assets - Ans:✔✔-C
Which of the following is reported in the equity section of the balance sheet?
A. Redeemable Preferred stock
B. Treasury stock
C. Investment in affiliates
D. Debentures - Ans:✔✔-B
Which of the following is not a component of recognized OPEB cost?
A. Service cost
B. Amortization of prior service costs
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FIRST PUBLISH OCTOBER 2024
Finance 470- MC Exam Practice
Questions and Answers
The net deferrals are included in the balance sheet as part of:
A. assets.
B. current liabilities.
C. shareholders' equity.
D. long-term liabilities - Ans:✔✔-B
Pension intensity can be measured by expressing the pension plan assets and the pension obligation
separately as:
A. a percentage of company's total liabilities.
B. a percentage of company's total assets.
C. a percentage of company's net income.
D. a percentage of company's shareholders' equity. - Ans:✔✔-B
Page 1/31
, ©GRACEAMELIA 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
Which of the following is not an actuarial assumption underlying the computation of the pension
obligation?
A. Employee turnover
B. Life expectancy
C. Interest rate
D. Service cost - Ans:✔✔-D
The plan is said to be underfunded, if:
A. the pension obligation is more than the asset value.
B. the pension obligation is less than the asset value.
C. the pension obligation is equal to the asset value.
D. none of the above. - Ans:✔✔-A
Synthetic leases may achieve all of the following benefits to the borrower except:
A. window dress the balance sheet.
B. increase cash flow.
C. reduce tax expense on the income statement.
Page 2/31
, ©GRACEAMELIA 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
D. increase net income. - Ans:✔✔-C
If Harms had decreased its compensation growth rate to 4.5% in 2006, the effect would have been:
A. an increased ABO.
B. an increased PBO.
C. a decreased ABO.
D. a decreased PBO. - Ans:✔✔-D.
If a company increases its expected return on plan assets this year, the effect would be to:
I. increase plan assets.
II. decrease PBO.
III. decrease pension expense.
IV. decrease minimum liability.
A. I, II and IV
B. I and IV
C. III and IV
Page 3/31
, ©GRACEAMELIA 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
D. III only - Ans:✔✔-D
Which of the following is not a component of pension expense?
A. Service cost
B. Interest cost
C. Actual return on plan assets
D. Expected return on plan assets - Ans:✔✔-C
Which of the following is reported in the equity section of the balance sheet?
A. Redeemable Preferred stock
B. Treasury stock
C. Investment in affiliates
D. Debentures - Ans:✔✔-B
Which of the following is not a component of recognized OPEB cost?
A. Service cost
B. Amortization of prior service costs
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