HFMA EXAM 2026/2027 | Complete Practice Examination |
Verified Answers | Certified Revenue Cycle Representative |
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Section 1: Healthcare Accounting Principles & Financial Reporting
(Questions 1-18)
Q1: A not-for-profit hospital receives a $2.5 million restricted donation for the
construction of a new cardiac wing. Under healthcare fund accounting principles, how
should this donation be initially recorded?
A. As unrestricted net assets with a footnote disclosure of the restriction
B. As temporarily restricted net assets until the cardiac wing is constructed, then
reclassified to unrestricted net assets ** [CORRECT]
C. As permanently restricted net assets since the funds are designated for a specific
building
D. As a liability until the construction is completed and the restriction is satisfied
Correct Answer: B
Rationale: Under FASB ASC 958-205 and healthcare fund accounting principles,
donor-imposed restrictions that expire with the passage of time or use (such as
,construction of a facility) create temporarily restricted net assets. Once the cardiac
wing is constructed and the restriction is satisfied, the funds are reclassified to
unrestricted net assets. Option A is incorrect because the restriction is legally binding
and must be reflected in the net asset classification. Option C is incorrect because
permanently restricted net assets apply only to endowments where the principal must
be maintained in perpetuity. Option D is incorrect because the donation is not a liability;
it represents a contribution received.
HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Q2: A hospital's Statement of Operations for FY 2026 shows total operating revenues of
$145 million, including $12 million in unrealized gains on investments held in the
general fund. The hospital also received $8 million in restricted grants for research
activities. What is the hospital's correct net operating income for performance
measurement purposes?
A. $145 million
B. $133 million ** [CORRECT]
C. $153 million
D. $137 million
Correct Answer: B
Rationale: Formula: Net Operating Income = Total Operating Revenues - Unrealized
Gains on Investments. Computation: $145,000,000 - $12,000,000 = $133,000,000.
Unrealized gains on investments are non-operating items and must be excluded from
,operating performance metrics. The $8 million restricted research grant is not included
in operating revenues since it is donor-restricted and reported separately. Option A
incorrectly includes unrealized gains. Option C incorrectly adds the restricted grant.
Option D incorrectly subtracts the restricted grant rather than the unrealized gains.
HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Q3: Under the 2026 Medicare Cost Report (CMS-2552-10), which of the following costs
would be classified as a routine service cost center rather than an ancillary service cost
center?
A. Radiology services provided in the imaging department
B. Laboratory services performed for inpatients and outpatients
C. Room and board charges for medical/surgical inpatient beds ** [CORRECT]
D. Physical therapy services furnished in the rehabilitation unit
Correct Answer: C
Rationale: Under CMS cost reporting principles, routine service cost centers include
general inpatient care areas such as medical/surgical, intensive care, and nursery
services—essentially room and board costs. Ancillary service cost centers include
specialized departments that provide specific services to both inpatients and
outpatients, such as radiology (A), laboratory (B), and physical therapy (D). The
distinction is critical for Medicare cost-based reimbursement calculations and
cost-to-charge ratio development.
, HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Q4: A hospital uses the accrual basis of accounting. On December 15, 2026, it performs
$85,000 of surgical services for a Medicare patient. The hospital receives the Medicare
remittance advice on January 10, 2027, showing a contractual adjustment of $28,000
and payment of $57,000. How much revenue should the hospital recognize in FY 2026?
A. $57,000
B. $85,000
C. $57,000, with the $28,000 recognized as a bad debt in 2027
D. $57,000 ** [CORRECT]
Correct Answer: D
Rationale: Under accrual basis accounting and ASC 606 revenue recognition principles
for healthcare, revenue is recognized at the amount expected to be collected (net
realizable value). The hospital recognizes $57,000 as net patient service revenue in FY
2026, with the $28,000 contractual adjustment recorded as a reduction to gross revenue
at the time of service. Option A is incorrect because it ignores the contractual
adjustment entirely. Option B is incorrect because gross charges are not revenue under
accrual accounting. Option C is incorrect because contractual adjustments are not bad
debts; they are anticipated payment shortfalls from third-party payers.
HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Verified Answers | Certified Revenue Cycle Representative |
Pass Guaranteed - A+ Graded
Section 1: Healthcare Accounting Principles & Financial Reporting
(Questions 1-18)
Q1: A not-for-profit hospital receives a $2.5 million restricted donation for the
construction of a new cardiac wing. Under healthcare fund accounting principles, how
should this donation be initially recorded?
A. As unrestricted net assets with a footnote disclosure of the restriction
B. As temporarily restricted net assets until the cardiac wing is constructed, then
reclassified to unrestricted net assets ** [CORRECT]
C. As permanently restricted net assets since the funds are designated for a specific
building
D. As a liability until the construction is completed and the restriction is satisfied
Correct Answer: B
Rationale: Under FASB ASC 958-205 and healthcare fund accounting principles,
donor-imposed restrictions that expire with the passage of time or use (such as
,construction of a facility) create temporarily restricted net assets. Once the cardiac
wing is constructed and the restriction is satisfied, the funds are reclassified to
unrestricted net assets. Option A is incorrect because the restriction is legally binding
and must be reflected in the net asset classification. Option C is incorrect because
permanently restricted net assets apply only to endowments where the principal must
be maintained in perpetuity. Option D is incorrect because the donation is not a liability;
it represents a contribution received.
HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Q2: A hospital's Statement of Operations for FY 2026 shows total operating revenues of
$145 million, including $12 million in unrealized gains on investments held in the
general fund. The hospital also received $8 million in restricted grants for research
activities. What is the hospital's correct net operating income for performance
measurement purposes?
A. $145 million
B. $133 million ** [CORRECT]
C. $153 million
D. $137 million
Correct Answer: B
Rationale: Formula: Net Operating Income = Total Operating Revenues - Unrealized
Gains on Investments. Computation: $145,000,000 - $12,000,000 = $133,000,000.
Unrealized gains on investments are non-operating items and must be excluded from
,operating performance metrics. The $8 million restricted research grant is not included
in operating revenues since it is donor-restricted and reported separately. Option A
incorrectly includes unrealized gains. Option C incorrectly adds the restricted grant.
Option D incorrectly subtracts the restricted grant rather than the unrealized gains.
HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Q3: Under the 2026 Medicare Cost Report (CMS-2552-10), which of the following costs
would be classified as a routine service cost center rather than an ancillary service cost
center?
A. Radiology services provided in the imaging department
B. Laboratory services performed for inpatients and outpatients
C. Room and board charges for medical/surgical inpatient beds ** [CORRECT]
D. Physical therapy services furnished in the rehabilitation unit
Correct Answer: C
Rationale: Under CMS cost reporting principles, routine service cost centers include
general inpatient care areas such as medical/surgical, intensive care, and nursery
services—essentially room and board costs. Ancillary service cost centers include
specialized departments that provide specific services to both inpatients and
outpatients, such as radiology (A), laboratory (B), and physical therapy (D). The
distinction is critical for Medicare cost-based reimbursement calculations and
cost-to-charge ratio development.
, HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
Q4: A hospital uses the accrual basis of accounting. On December 15, 2026, it performs
$85,000 of surgical services for a Medicare patient. The hospital receives the Medicare
remittance advice on January 10, 2027, showing a contractual adjustment of $28,000
and payment of $57,000. How much revenue should the hospital recognize in FY 2026?
A. $57,000
B. $85,000
C. $57,000, with the $28,000 recognized as a bad debt in 2027
D. $57,000 ** [CORRECT]
Correct Answer: D
Rationale: Under accrual basis accounting and ASC 606 revenue recognition principles
for healthcare, revenue is recognized at the amount expected to be collected (net
realizable value). The hospital recognizes $57,000 as net patient service revenue in FY
2026, with the $28,000 contractual adjustment recorded as a reduction to gross revenue
at the time of service. Option A is incorrect because it ignores the contractual
adjustment entirely. Option B is incorrect because gross charges are not revenue under
accrual accounting. Option C is incorrect because contractual adjustments are not bad
debts; they are anticipated payment shortfalls from third-party payers.
HFMA Body of Knowledge Domain: Healthcare Accounting & Financial Reporting
