HAC HAC Healthcare Payroll & Compensation Accounting 2 — Questions and Answers
Question 1: A hospital uses a cost-per-hour metric to manage staffing. If total productive labor hours are 120,000 and direct labor cost is $4,800,000, what is the cost per productive hour?
- $35.00
- $40.00 (Correct answer)
- $48.00
- $50.00
Correct answer: $40.00
$4,800,000 ÷ 120,000 hours = $40.00 per productive hour, a key benchmark for staffing efficiency analysis.
Question 2: Which federal tax deposit schedule applies to a hospital whose payroll tax liability was $75,000 in the lookback period?
- Annual depositor
- Monthly depositor
- Semi-weekly depositor (Correct answer)
- Quarterly depositor
Correct answer: Semi-weekly depositor
Employers whose total payroll tax liability exceeded $50,000 during the IRS lookback period must deposit taxes on a semi-weekly schedule.
Question 3: For healthcare employees who receive tips (e.g., food service staff), the employer is required to:
- Exclude tips from FICA calculations entirely
- Withhold FICA taxes on reported tips (Correct answer)
- Report tips only on Form 1099-MISC
- Pay tip income as a separate fringe benefit
Correct answer: Withhold FICA taxes on reported tips
Employers must withhold and remit employee FICA taxes on all reported tip income, and also pay the employer's matching FICA share on those tips.
Question 4: What is the primary purpose of a paid time off (PTO) liability account on a hospital's balance sheet?
- To record future capital expenditures for staff workstations
- To represent the estimated cost of earned but unused employee leave (Correct answer)
- To track overtime premiums owed to staff
- To record payroll tax deposits made in advance
Correct answer: To represent the estimated cost of earned but unused employee leave
The PTO liability reflects the obligation to compensate employees for leave they have earned but not yet taken, requiring ongoing accrual as PTO is earned.
Question 5: A critical access hospital offers a defined benefit pension plan. Under ASC 715, which amount is reported on the balance sheet?
- Only current service cost for the year
- The funded status (projected benefit obligation minus plan assets) (Correct answer)
- Total historical contributions made to the plan
- Accumulated post-retirement benefit obligation only
Correct answer: The funded status (projected benefit obligation minus plan assets)
ASC 715 requires the funded status—projected benefit obligation minus the fair value of plan assets—to be recognized as an asset or liability on the balance sheet.
Question 6: Which of the following is an example of a non-cash compensation benefit that must be included in an employee's W-2 gross income?
- Health insurance premiums paid under a Section 125 plan
- Employer contributions to a 401(k) up to IRS limits
- Personal use of a hospital-owned vehicle (Correct answer)
- Employer-provided on-site gym access valued under de minimis rules
Correct answer: Personal use of a hospital-owned vehicle
Personal use of a company vehicle is a taxable fringe benefit that must be valued using IRS methods and included in the employee's W-2 as compensation.
HAC HAC Healthcare Payroll & Compensation Accounting 2
A hospital uses a cost-per-hour metric to manage staffing.
If total productive labor hours are 120,000 and direct labor cost is $4,800,000, what is the cost per productive hour?