Worldatwork Exam T7 Topic 1 Question 107 Discussion

Actual exam question for Worldatwork's T7 exam

Question #: 107
Topic #: 1

[All T7 Questions]

The profit-sharing plan of Company ABC requires the company pay a specified proportion of its profit for the year to employees who serve throughout the year. If no employees leave during the year, the total profit-sharing payments for the year will be 3% of profit. The company estimates that staff turnover will reduce the payments to 2.5% of profit. What does Company ABC recognize as a liability and an expense?

A0.5% of profit

B2.5% of profit

C3% of profit

D5.5% of profit

Show Suggested Answer

Suggested Answer: B

by Felice at Feb 07, 2025, 12:01 PM

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Joanna

8 days ago

I agree with Augustine. The company estimates that staff turnover will reduce the payments to 2.5% of profit.

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Linette

14 days ago

Hmm, I think the correct answer is B) 2.5% of profit. The question clearly states that staff turnover will reduce the payments to 2.5% of profit, so that's what the company should recognize as a liability and an expense.

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Amber

6 days ago

That makes sense, the company should recognize 2.5% of profit as a liability and an expense.

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Rachael

11 days ago

I agree, the answer is B) 2.5% of profit.

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Augustine

15 days ago

I think the answer is B) 2.5% of profit.

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