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:

Induction

The process of formally introducing a new employee to their role, the company culture, and their colleagues.

Generalization

A broad statement or conclusion derived from specific instances or examples, applying to a wider range of situations.

Specific Conclusion

A definitive end or resolution that directly addresses the particular issue or question at hand.

Circular Reasoning

A logical fallacy where the conclusion is supported by premises that assume the conclusion's truth, creating a circle in reasoning.