Homework Assignment: Write A 175 To 265-Word Response To The

Homework Assignmentwritea 175 To 265 Word Response To The Followingh

Homework assignment Write a 175- to 265-word response to the following: How does a health care provider indicate the obligation of providing care under a managed care contract that has been paid in advance? In a publicly traded organization, does the valuation of owners equity represent the worth of the organization to its owners? Explain your answer. Format your assignment according to APA guidelines. Cite and list your sources appropriately.

Paper For Above instruction

A health care provider indicates the obligation of providing care under a prepaid managed care contract primarily through the recognition of a liability on their financial statements, typically categorized as a "deferred revenue" or "unearned revenue." When services are prepaid, the organization records the amount received as a liability because it has an obligation to provide healthcare services in the future. As the provider delivers care, the liability is gradually reduced, and revenue is recognized proportionally, ensuring that financial statements accurately reflect the ongoing obligation. This approach aligns with accounting principles such as the matching principle, which matches revenues with the expenses incurred to earn them (Kieso, Weygandt, & Warfield, 2019).

In a publicly traded organization, the valuation of owners’ equity does not necessarily reflect the intrinsic worth of the organization to its owners. Instead, equity valuation is often based on market perceptions, investor sentiment, and the company's stock price, which can be influenced by external factors unrelated to fundamental value. The market value of equity may fluctuate significantly in response to macroeconomic conditions, investor optimism, or speculative trading, diverging from the organization's actual financial health or operational performance (Damodaran, 2020). Therefore, while owners' equity on financial statements indicates book value, the market valuation often provides a more dynamic perspective of an organization’s worth from an investor's standpoint.

References

Damodaran, A. (2020). Narrative and numbers: The Value of data in financial modeling. Columbia Business School Publishing.

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (16th ed.). Wiley.