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Worldatwork Exam T7 Topic 3 Question 89 Discussion

Actual exam question for Worldatwork's T7 exam
Question #: 89
Topic #: 3
[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 Kayleigh at Jun 01, 2024, 08:44 AM

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Ricarda
8 months ago
Haha, I bet the exam writers are laughing at us right now. 'Let's see how many ways we can confuse these poor souls!'
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Lai
8 months ago
Wait, wait, wait. What if the answer is D) 5.5% of profit? You know, because the company has to recognize both the original 3% and the reduced 2.5% due to turnover. Just throwing that out there.
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Valentin
7 months ago
B) 2.5% of profit
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Dottie
8 months ago
C) 3% of profit
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Adelina
8 months ago
A) 0.5% of profit
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Irma
8 months ago
B) 2.5% of profit
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Fletcher
8 months ago
A) 0.5% of profit
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Marta
9 months ago
You guys are overthinking this. The correct answer is clearly C) 3% of profit. The company recognizes the full profit-sharing obligation, even if it's reduced later due to turnover.
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Lenna
9 months ago
Really? I was thinking it's A) 0.5% of profit, since that's the difference between the original 3% and the reduced 2.5% due to staff turnover.
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Reyes
8 months ago
So, the correct answer is B) 2.5% of profit then.
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Georgeanna
8 months ago
I agree, the liability and expense recognized by Company ABC would be 2.5% of profit.
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Eden
8 months ago
I think it's B) 2.5% of profit, that's what the company estimates after factoring in staff turnover.
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Donte
9 months ago
Hmm, this is tricky. I think the answer is B) 2.5% of profit, since the company estimates that staff turnover will reduce the payments to that amount.
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Joaquin
8 months ago
Yes, that's correct. It's based on the estimated staff turnover affecting the profit-sharing payments.
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Malcom
8 months ago
I agree, the company recognizes 2.5% of profit as a liability and an expense.
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Apolonia
8 months ago
That makes sense, it's based on the estimated staff turnover affecting the profit-sharing payments.
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Twila
9 months ago
I agree, the company recognizes 2.5% of profit as a liability and an expense.
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Micaela
9 months ago
I agree with you. The company estimates that staff turnover will reduce the payments to 2.5% of profit.
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Crista
9 months ago
I think the answer is B) 2.5% of profit.
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