AHM-520 Free Practice Test

- (Topic 1)
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.

1. A. Measuring-unit concept
2. B. Full-disclosure concept
3. C. Cost concept
4. D. Time-period concept

Correct Answer: C

- (Topic 2)
One true statement about variance analysis is that

1. A. A price variance is the difference between the budgeted quantities to be sold and theactual quantities sold, multiplied by the budgeted amount
2. B. Variance analysis suggests solutions to a particular problem
3. C. Positive variances generally are favorable, from a health plan's point of view, for the plan's expenses but unfavorable for the plan's revenues
4. D. An effective variance system typically focuses on matters that require management's attention

Correct Answer: D

- (Topic 1)
Providing services under Medicare or Medicaid can impose on health plans financial risks and costs that are greater than those related to providing services to the commercial population. Reasons that an health plan's financial risks and costs for providing services to Medicare and Medicaid enrollees tend to be higher include

1. A. Most Medicare and Medicaid enrollees can disenroll from a health plan on a monthly basis
2. B. The high incidences of chronic illness in both the Medicare and Medicaid populations results in higher costs related to coordinating care and case management
3. C. Medicare and Medicaid enrollees tend to have a high level of costs in the first few months of enrollment as the health plan educates them about the health plan system and performs initial health screening to evaluate their health
4. D. all of the above

Correct Answer: D

- (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 of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
The main purpose of Caribou's balance sheet is to

1. A. Reveal how Caribou obtained particular assets or liabilities
2. B. Show how much money Caribou has realized from its operations during an accounting period
3. C. Measure the owners' wealth
4. D. Reconcile the cash that Caribou has on hand at the beginning and at the end of an accounting period

Correct Answer: C

- (Topic 2)
The Swann Health Plan excludes mental health coverage from its basic health benefit plan. Coverage for mental health is provided by a specialty health plan called a managed behavioral health organization (MBHO). This arrangement recognizes the fact that distinct administrative and clinical expertise is required to effectively manage mental health services. This information indicates that Swann manages mental health services through the use of a:

1. A. Formulary
2. B. Risk pod
3. C. Carve-out
4. D. Case rate

Correct Answer: C