Under GAAP, Three Approaches to Expense Recognition Are Generally Allowed

question 101

Multiple Choice

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

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

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Definitions:

United States

A country located in North America consisting of 50 states and a federal district, known for its significant influence in global affairs, economy, and culture.

Mental Disorder

A broad category of conditions that affect an individual's thinking, feeling, mood, or behavior, often significantly impacting day-to-day functioning.

Sociological Reason

The practice of examining social phenomena, structures, and patterns with analytical and critical thinking to understand human behavior and societal changes.