Free AHM-520 Exam Braindumps

- (Topic 1)
The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series ofadjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
The basic formula for Caribou's income statement is

1. A. Cash Inflows – Cash Outflows = Net Cash Inflow (Outflow)
2. B. Revenues – Expenses = Net Income (Net Loss)
3. C. Sources of Funds – Uses of Funds = Net Change in Cash
4. D. Assets = Liabilities + Owners' Equity

Correct Answer: B

- (Topic 1)
The Health Maintenance Organization (HMO) Model Act, developed by the National Association of Insurance Commissioners (NAIC), represents one approach to developing solvency standards. One drawback to this type of solvency regulation is that it

1. A. Uses estimates of future expenditures and premium income to estimate future risk
2. B. Fails to adjust the solvency requirement to account for the size of an HMO's premiums and expenditures
3. C. Assumes that the amount of premiums an HMO charges always directly corresponds to the level of the risk that the HMO faces
4. D. Fails to mandate a minimum level of capital and surplus that an HMO must maintain

Correct Answer: C

- (Topic 1)
A health plan that capitates a provider group typically provides or offers to provide stop-loss coverage to that provider group.

1. A. True
2. B. False

Correct Answer: A

- (Topic 1)
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

1. A. Report the payment of the health plan's utility bills
2. B. Spread the payment of sales force commissions over the premium paying period of healthcare coverage
3. C. Report the fees paid by the health plan to attorneys and consultants
4. D. Depreciate the cost of a new computer system over the useful life of the system

Correct Answer: D

- (Topic 1)
If the Ascot health plan's accountants follow the going-concern concept under GAAP, then these accountants most likely

1. A. Assume that Ascot will pay its liabilities immediately or in full during the current accounting period
2. B. Defer certain costs that Ascot has incurred, unless these costs contribute to the healthplan's future earnings
3. C. Assume that Ascot is not about to be liquidated, unless there is evidence to the contrary
4. D. Value Ascot's assets more conservatively than they would under SAP

Correct Answer: C