The expense for other postretirement benefits, such as health care benefits, dental benefits, and eye care benefits, currently is accounted for

Question

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The expense for postretirement benefits should be accounted for on an accrual basis, as this provides a better matching of expenses with revenues. The benefits earned by employees during their service period create an obligation for the employer, which should be reflected on the financial statements. Cash basis accounting would not capture this obligation accurately. While footnote disclosure is important, it is not sufficient to reflect the actual expense on the financial statements. Therefore, choice A is the best answer.

The Expense for Other Postretirement Benefits, Such as Health Care