Prior to SFAS No. 106, OPEB had been handled on a cash basis of accounting.

Question

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Prior to SFAS No. 106, OPEB (Other Postemployment Benefits) had been handled on a cash basis of accounting, which means expenses for these benefits were recognized when they were paid, rather than when they were earned. However, SFAS No. 106 required companies to use accrual accounting for OPEB expenses, which meant recognizing the costs as they were earned by employees, rather than when they were paid out.