Asked Jan 22, 2020

Explain how cash-basis accounting for pension plans differs
from accrual-basis accounting for pension plans.
Why is cash-basis accounting generally considered unacceptable
for pension plan accounting?


Expert Answer

Step 1

Under cash basis of accounting pension cost are recognised on the basis of cash paid by the employer towards the pension fund in a given period and hence funding of pension plan forms the basis of expense reco...

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