AHIP AHM-520 Exam - Topic 5 Question 112 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 112
Topic #: 5

In the following paragraph, a sentence contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have selected.

The Igloo health plan recognizes the receipt of its premium income during the accounting period in which the income is earned, regardless of when cash changes hands. However, Igloo recognizes its expenses when it earns the revenues related to those expenses, regardless of when it receives cash for the revenues earned. This information indicates that the (realization/capitalization) principle governs Igloo's revenue recognition, whereas the (matching/initial-recording) principle governs its expense recognition.

Arealization / matching

Brealization / initial-recording

Ccapitalization / matching

Dcapitalization / initial-recording

Show Suggested Answer

Suggested Answer: A

by Paris at Jun 12, 2025, 05:32 PM

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Felice

5 months ago

I’m not sure about the matching principle here.

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Brock

5 months ago

I thought it was B at first, but A makes more sense.

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Noel

5 months ago

Igloo uses accrual accounting for revenue and expenses.

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Leila

5 months ago

Wait, is it really that straightforward?

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Kami

5 months ago

Definitely A, realization and matching are spot on!

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Rosina

6 months ago

I recall that the matching principle is about aligning expenses with revenues, so I think A is the best answer, but I hope I’m not overthinking it!

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Long

6 months ago

I’m a bit confused about the difference between capitalization and realization. I feel like I might mix them up under pressure.

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Mirta

6 months ago

I remember practicing a similar question where we discussed the matching principle. It seems to fit here too, so I’m leaning towards option A.

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Veronique

6 months ago

I think the realization principle is definitely the right choice for revenue recognition, but I'm not sure about the expense part.

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Colton

7 months ago

Alright, I've got this. The paragraph is clearly describing the realization principle for revenue recognition and the matching principle for expense recognition. I'm confident I can select the right answer choice.

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Elly

7 months ago

Hmm, the question is asking me to determine which word in each pair correctly completes the statement. I'll have to analyze the information provided and make my best judgment on the right answers.

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Tequila

7 months ago

Okay, the paragraph is talking about Igloo's accounting practices. I think I need to identify which principle governs their revenue recognition and which one governs their expense recognition. Let me re-read this closely.

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Frankie

7 months ago

This looks like a tricky accounting principles question. I'll need to carefully read through the paragraph and think about the key concepts of revenue and expense recognition.

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Bea

10 months ago

Wait, is this a trick question? I thought the answer was going to be something simple, like 'the dog ate my homework'.

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Annita

10 months ago

Hmm, I'm not sure about this. Capitalization and initial-recording? Sounds like a recipe for some creative accounting to me.

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Cecily

8 months ago

No, I believe it's capitalization and initial-recording.

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Dana

9 months ago

I think it's realization and matching.

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Britt

10 months ago

Realization and matching - that's the dynamic duo of accounting principles! I'm feeling confident about this one.

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Dottie

9 months ago

Yes, those principles are important for revenue and expense recognition.

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Stephen

9 months ago

I think the answer is A) realization / matching.

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Nana

9 months ago

I agree, realization and matching are key principles in accounting.

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Dacia

10 months ago

I'm not sure, but I think it makes sense. The capitalization principle is about recording costs as assets, not expenses, so it wouldn't fit in this context.

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Francisca

10 months ago

I agree with Shizue, because the realization principle is about recognizing revenue when it is earned, and the matching principle is about matching expenses to the revenue they generate.

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