QUESTION: 89 Exam Topic: 1, Volume A

This concept, which is an extension of the going-concern concept, holds that the value of an asset that a company reports in its accounting records should be the asset's historical cost, not its current market value. Although this concept offers objectivity and reliability, it may lack relevance, particularly for assets held for a long period of time.

From the following answer choices, choose the name of the accounting concept that matches the description.

Measuring-unit concept
Full-disclosure concept
Cost concept
Time-period concept

Answer(s): C

Reveal Solution Next Question

QUESTION: 90 Exam Topic: 1, Volume A

In the following paragraph, a sentence contains two pairs of words enclosed in parentheses.

Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have selected.

The Igloo health plan recognizes the receipt of its premium income during the accounting period in which the income is earned, regardless of when cash changes hands. However, Igloo recognizes its expenses when it earns the revenues related to those expenses, regardless of when it receives cash for the revenues earned. This information indicates that the (realization/capitalization) principle governs Igloo's revenue recognition, whereas the (matching/initial-recording) principle governs its expense recognition.

realization / matching
realization / initial-recording
capitalization / matching
capitalization / initial-recording

Answer(s): A

Reveal Solution Next Question

QUESTION: 91 Exam Topic: 1, Volume A

Under GAAP, three approaches to expense recognition are generally allowed: associating cause and effect, systematic and rational allocation, and immediate recognition. A health plan most likely would use the approach of systematic and rational allocation in order to

Report the payment of the health plan's utility bills
Spread the payment of sales force commissions over the premium paying period of healthcare coverage
Report the fees paid by the health plan to attorneys and consultants
Depreciate the cost of a new computer system over the useful life of the system

Answer(s): D

Reveal Solution Next Question

QUESTION: 92 Exam Topic: 1, Volume A

The Zane health plan uses a base of accounting known as accrual-basis accounting. With regard to this base of accounting, it can correctly be stated that accrual-basis accounting

Enables an interested party to view the consequences of obligations incurred by Zane, but only if the health plan ultimately completes the business transaction
Is not suitable for measuring Zane's profitability
Requires Zane to record revenues when they are earned and expenses when they are incurred, even if cash has not actually changed hands
Prohibits Zane from making adjusting entries to its accounting records at the end of each accounting year

Answer(s): C

Reveal Solution Next Question

Free AHM-520 Exam Braindumps (page: 23)

QUESTION: 89 Exam Topic: 1, Volume A

QUESTION: 90 Exam Topic: 1, Volume A

QUESTION: 91 Exam Topic: 1, Volume A

QUESTION: 92 Exam Topic: 1, Volume A