EXERCISE 1 -EMPLOYEE BENEFITS- DEFINITION OF TERMS

1. ACCUMULATED BENEFIT OBLIGATION- It is the approximate account pf a

company’s pension plan liability at a single point in time. It is also the present
value of a pension based on the accumulated work to date.
2. ACTUAL RETURN O PLAN ASSETS-It refers to the performance of the plan
assets in a pension plan.
3. ACTUARIAL PRESENT VALUE-the present value of payments that an entity
expects to pay, under a retirement benefit plan, to its existing and past
employees for services already rendered.
4. ACTUARIES- it is the business professional skills that are advanced and deals
with the measurement and management of risk and uncertainty.
5. ASSET GAINS AND LOSSES
6. BENEFITS/YEARS -OF-SERVICE-METHOD
7. COMPONENTS OF PENSION COST
8. CONTRIBUTORY PENSION PLAN
9. CURTAILMENT- the act of restricting or reducing something or cutting it short.
10. DEFINED BENEFIT OBLIGATION- It is the term by the international accounting
standards to a company’s liability due to pension promises.
11. DEFINED BENEFIT PLAN-It is where the employer commits to pay a definite
amount of retirement benefits which can be determined using a plan formula.
12. DEFINED CONTRIBUTION PLAN-it is the employer commits to make fixed
contributions to a fund. The number of benefits that an employee will receive is
dependent.
13. DISCOUNT RATE- It is the interest rate used to determine the present value of
the future cashflows in a discounted cash flow.
14. FUNDED PENSION PLAN
15. FUNDED STATUS-it is also called the financial status of a pension loan. It is
subtracting pension fund obligations from assets.
16. INTEREST ON THE LIABILITY (INTEREST EXPENSE)
17. LIABILITY GAINS AND LOSSES
18. NET DEFINED BENEFIT OBLIGATION(ASSET)
19. NON-CONTRIBUTORY PENSION PLAN
20. PAST SERVICE COST(PSC)- is the change in the present value of the defined
benefit obligation for employee service in prior periods, resulting in the current
period from the introduction of, or changes to, post-employment benefits or other
long-term employee benefits.
21. PENSION ASSET/LIABILITY
22. PENSION PLAN-A pension plan is an employee benefit plan established or
maintained by an employer or by an employee organization (such as a union), or
both, that provides retirement income or defers income until termination of
covered employment or beyond.
23. PENSION WORKSHEET-It is where you can record all the pension entries or
amount that you received.
24. PLAN ASSET-It is usually the stocks, bonds, and other investment that are been
segregated and restricted to provide for pension benefits.
25. PROJECTED UNIT CREDIT METHOD (BENEFITS/YEARS-OF-SERVICE
METHOD)
26. QUALIFIED PENSION PLAN- It is the retirement plan that is established by an
employer that is designed to provide the retirement income of the designated
employees and their beneficiaries
27. RECONCILIATION-s the process of comparing transactions and activity to
supporting documentation. Example of this is when comparing a bank statement
to the internal record of cash receipts and disbursements.
28. REMEASUREMENTS-is the process of re-establishing the value of an item or
asset to provide a more accurate financial record of its value. Companies use
remeasurement to report assets that are valued in a different currency on their
financial statements.
29. SERVICE COST- it is the identifying all costs associated with building, supporting
and delivering your service. Examples of these are equipment, staff labor,
professional fees, license fee and etc.
30. SETTLEMENT(n)
31. VESTED BENEFIT OBLIGATION- It refers to the actuarial present value of the
pension plan that has been earned by the employee.
32. VESTED BENEFITS- it is the financial package granted to the employees, who
have met the requirements and they are the one who receive a full pay instead of
partial benefit.