HAC HAC Healthcare Payroll & Compensation Accounting 1 — Questions and Answers
Question 1: Under FLSA, which healthcare workers are generally classified as exempt from overtime pay requirements?
- Certified nursing assistants
- Licensed physicians earning above the salary threshold (Correct answer)
- Medical billing specialists
- Home health aides
Correct answer: Licensed physicians earning above the salary threshold
Licensed physicians and other highly compensated professionals who meet salary and duties tests are exempt from FLSA overtime under the white-collar exemption.
Question 2: A hospital's total compensation expense for the period includes which of the following in addition to gross wages?
- Accounts receivable balances
- Employer payroll taxes and benefits costs (Correct answer)
- Patient revenue adjustments
- Depreciation on medical equipment
Correct answer: Employer payroll taxes and benefits costs
Total compensation expense encompasses gross wages plus employer-side payroll taxes (FICA, FUTA, SUTA) and employee benefits such as health insurance and retirement contributions.
Question 3: Which IRS form must a hospital use to report annual wages and withheld taxes for each employee?
- Form 1099-NEC
- Form W-2 (Correct answer)
- Form 941
- Form 1095-C
Correct answer: Form W-2
Form W-2 (Wage and Tax Statement) is issued annually by employers to report each employee's wages and withheld federal, state, and local taxes.
Question 4: When a healthcare facility accrues vacation pay at year-end, which accounting entry is correct?
- Debit Vacation Expense; Credit Cash
- Debit Vacation Expense; Credit Accrued Vacation Liability (Correct answer)
- Debit Accrued Vacation Liability; Credit Vacation Expense
- Debit Prepaid Expense; Credit Vacation Expense
Correct answer: Debit Vacation Expense; Credit Accrued Vacation Liability
Accruing earned but unpaid vacation requires debiting compensation expense and crediting a current liability to match the cost to the period in which it was earned.
Question 5: A healthcare organization classifies travel nurse agency fees as which type of labor cost?
- Productive direct labor
- Contract or agency labor (non-employee) (Correct answer)
- Fringe benefit expense
- Indirect overhead
Correct answer: Contract or agency labor (non-employee)
Agency or contract labor is reported separately from employee wages because the facility pays a staffing agency rather than the individual worker, with no payroll tax obligation.
Question 6: Which GAAP principle requires a hospital to recognize physician bonus expense in the period the bonus was earned, even if it is paid in the next fiscal year?
- Historical cost principle
- Matching principle (Correct answer)
- Revenue recognition principle
- Conservatism principle
Correct answer: Matching principle
The matching principle requires expenses to be recorded in the same period as the related revenue, so bonuses earned in the current year must be accrued regardless of the payment date.
HAC HAC Healthcare Payroll & Compensation Accounting 1
Under FLSA, which healthcare workers are generally classified as exempt from overtime pay requirements?