An accountant is reviewing the ﬁnancial statements of a company and notes that the company reports a pension liability on its balance sheet. What does the pension liability represent?
A) The increase in the pension obligation that was earned this year.
B) The present value of all future pension obligations.
C) The difference between the pension plan obligations and the pension plan assets.
D) The amount of this year's pension expense that has not been paid yet.

Question

Quizplus · Accepted Answer

Pension liability represents the difference between the pension plan obligations and the pension plan assets. This means it's the amount the company owes for its pension plan that is not covered by the assets set aside in the pension fund.

An Accountant Is Reviewing the ﬁNancial Statements of a Company