AHIP Exam AHM-520 Topic 6 Question 97 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 97
Topic #: 6

All publicly traded health plans in the United States are required to prepare financial statements for use by their external users in accordance with generally accepted accounting principles (GAAP). In addition, health insurers and health plans that fall under the jurisdiction of state insurance departments are required by law to prepare certain financial statements in accordance with statutory accounting practices (SAP). In a comparison of GAAP to SAP, it is correct to say that:

AGAAP is established and promoted by the National Association of Insurance Commissioners (NAIC), whereas SAP is established and promoted by the Financial Accounting Standards Board (FASB)

BThe going-concern concept is an underlying premise of GAAP, whereas SAP tends to focus on the liquidation value of the MCO or the insurer

CGAAP provides for a single method of valuing all of a health plan's assets, whereas SAP offers the health plan more than one method for valuing its assets

DThe principle of conservatism is fundamental to GAAP, whereas SAP generally is not conservative in nature

Show Suggested Answer

Suggested Answer: B

by Bulah at Sep 13, 2024, 02:00 PM

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Benton

5 months ago

If GAAP and SAP were superheroes, GAAP would be 'Generally Accepted Accounting Principles-Man' and SAP would be 'Statutory Accounting Practices-Woman'. Together, they'd fight financial fraud and balance the books!

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Pura

4 months ago

D) The principle of conservatism is fundamental to GAAP, whereas SAP generally is not conservative in nature

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Bok

4 months ago

C) GAAP provides for a single method of valuing all of a health plan's assets, whereas SAP offers the health plan more than one method for valuing its assets

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Marva

4 months ago

B) The going-concern concept is an underlying premise of GAAP, whereas SAP tends to focus on the liquidation value of the MCO or the insurer

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Lenny

4 months ago

A) GAAP is established and promoted by the National Association of Insurance Commissioners (NAIC), whereas SAP is established and promoted by the Financial Accounting Standards Board (FASB)

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Whitley

5 months ago

I heard the FASB is actually run by a bunch of accountants who moonlight as magicians. They use their magical powers to make profits disappear!

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Frank

4 months ago

SAP focuses more on the liquidation value of the MCO or the insurer, while GAAP is based on the going-concern concept.

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Arthur

4 months ago

Oh really? I thought the FASB was all about magic tricks. So, what's the deal with SAP then?

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Ria

5 months ago

That's not true, the FASB is actually responsible for establishing and promoting GAAP, not making profits disappear.

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Luann

5 months ago

Hmm, I'm torn between B and C. Maybe I should just flip a coin and hope for the best. Or maybe I'll go with the answer that sounds the most 'statutory'.

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Mabel

5 months ago

I'm going with C. GAAP has a single method for valuing assets, while SAP offers more flexibility in asset valuation.

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Kris

5 months ago

I'm not sure about this one, but B makes sense to me. GAAP focusing on the going-concern concept and SAP on liquidation value.

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Mozell

5 months ago

I think I'll go with D. GAAP is known for being conservative in nature, so that seems like the right answer.

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Isidra

5 months ago

I agree with you, C seems to be the correct choice. SAP does offer more than one method for valuing assets.

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Jettie

6 months ago

D seems like the right choice to me. GAAP emphasizes the principle of conservatism, but SAP is generally more liberal in its approach.

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Truman

4 months ago

So, it's important for health plans to understand the differences between GAAP and SAP when preparing financial statements.

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Keneth

5 months ago

SAP, on the other hand, is generally more liberal in nature.

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Elke

5 months ago

That's true. GAAP tends to be more cautious in its approach.

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Viola

5 months ago

I agree, D is the correct choice. GAAP is more conservative compared to SAP.

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Jacquline

6 months ago

I'm not sure, but I think the going-concern concept is important in GAAP

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Chaya

6 months ago

I think B is the correct answer. GAAP focuses on the going-concern concept, while SAP is more concerned with the liquidation value of the insurer.

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Azalee

5 months ago

It's important to understand the differences between GAAP and SAP for financial reporting purposes.

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Glenn

5 months ago

That's true, GAAP looks at the going-concern concept while SAP looks at liquidation value.

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Melodie

5 months ago

I agree, B is the correct answer. GAAP and SAP have different focuses.

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Breana

6 months ago

I agree with Leeann, GAAP and SAP have different governing bodies

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Leeann

6 months ago

I think the correct answer is A) GAAP is established and promoted by the National Association of Insurance Commissioners (NAIC), whereas SAP is established and promoted by the Financial Accounting Standards Board (FASB)

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