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Exam AHM-520 topic 1 question 97 discussion

Actual exam question from AHIP's AHM-520
Question #: 97
Topic #: 1
[All AHM-520 Questions]

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:

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

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