Adjusting Operating CF in pension

Hi all, so I came across this question in schweser, got it right but confused:

Vol 1 exam 2 Q100

Baragutti is most likely to suggest adjusting the cash flow used by the board as a basis of its valuation by: (CF here is referring to operating CF)

A is wrong

B. decreasing it if employer contributions are lower than TPPC

C. increasing it if employer contributions are higher than the TPPC

Answer is B, but isn’t C is also correct lol? if Contribution > TPPC then we add to CFO and reduce same amount in CFF, on the other hand when contribution < TPPC, we remove the after tax short fall from CFO and add the same amount to CFF.

Guess what, funny enough in same book exam 3 Q90 requires u to do the adjustment in an over contributed situation. Contribution 5000 - 4250 TPPC = 750 . answer is increase operating CF by 750 and decreasing CFF by the same amount.

For for the help :] :+1:

if contribution>expense, this is repayment. Thus, CFF outflow, CFO inflow

if contribution

I think both answers are theoretically right too, but perhaps the question wants us to link our answer to the specific passage? Since TPPC>contribution in the given case, answer B is the correct solution

i might be very wrong here too, but generally schweser question sequence, unlike the CFAI pattern, does not follow the exact passage sequence…so i am assuming what i said above is possible

Really expect better from schweser, but anything at least I confirm that I got the concept right. Thanks and good luck to everyone :slight_smile: