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Worldatwork Exam T7 Topic 2 Question 87 Discussion

Actual exam question for Worldatwork's T7 exam
Question #: 87
Topic #: 2
[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?

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Suggested Answer: B

by Linette at May 09, 2024, 03:06 PM

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Sharmaine
8 months ago
Makes sense. They would recognize what they realistically expect to pay.
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Mammie
8 months ago
The company estimates turnover and actual payment will reduce to 2.5%.
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Carma
8 months ago
Why do you think B is correct?
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Mammie
9 months ago
I think the answer might be B) 2.5% of profit.
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Carma
9 months ago
Yeah, it's all about their liability and expense.
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Cassie
10 months ago
This profit-sharing question is tricky.
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