Question

Service cost is the expense caused by the increase in the accumulated benefit obligation because of employees' service during the current year.

a)true b)false

Answer 1

Service cost is not an expense caused by the increase in the accumulated benefit obligation because of employees' service during the current year.

Step-by-step explanation:

False.

1. Service cost is not an expense caused by the increase in the accumulated benefit obligation because of employees' service during the current year. It refers to the expense recognized due to the increase in the projected benefit obligation resulting from the employees' service during the current year.
2. Accumulated benefit obligation represents the estimated present value of pension benefits based on past salaries and service.