Essentially for every dollar thrown at it you get 90 - 95 cents worth of heat, the rest goes up the flue or... As for the testing you might want to pop over to ENERGY STAR as they have the criteria listed for the testing there as I recall
Adding to Sean's comment... The reason a 90%+ furnace uses a PVC flue (as opposed to metal) is because the flue gas is cooler, compared to a conventional 80% furnace, which loses 20% up the flue. By design, higher efficiency furnaces extract more heat from the combustion air prior to exhaust.
Note that the AFUE rating (annual fuel utilization efficiency) does not account for the electricity that powers the blower motor, inducer fan and electronics.
You also may also want to account for the distribution losses as you move the heat from the exchange to the living space. It's not uncommon to lose 10-20% through leaks and lack of insulation on the ducts / plenum.
NO combustion based heating system can ever be 100% efficient, according to the Second Law of Thermodynamics.
Energy can neither be created nor destroyed, but only converted from one form to another, The efficiency of a furnace or boiler is a measure of how many BTU/hr in the chemical energy of the fuel can be converted to heat energy that is useful to do work (such as heating the house or heating hot water). The more heat energy that goes out the flue, the less is available to do work, and the lower the efficiency which is measured as "AFUE", or Annual Fuel Utilization Efficiency. The AFUE is based on laboratory testing and adjusted for seasonal variation in efficiency.
Condensing furnaces and boilers cool down the combustion (or flue gases) to condense the water vapor. It takes energy to convert liquid water to a vapor (the "Latent Heat of Vaporization"), and that energy is given up when water vapor is cooled to the point that it condenses. These condensing heaters typically have AFUEs of >95%, BUT if the flue gases are not cooled enough to condense, you won't achieve those higher efficiencies. This is a problem with many boiler installs, where the boiler return water temperature is not cool enough for condensation and the rated efficiency is not attained.
As noted above, AFUE does not include distribution or electrical inefficiencies.
Great question - what the efficiency rating means is one of the most common questions we get asked. In simple terms, if something is 90% AFUE - 90% of the fuel you consume is being used for heat inside the home - the other 10% being wasted. Higher the AFUE the better!
I like looking at system efficiency - Lets say the you have a 95% gas using furnace 100,000 BTU's in put. 1000 CFM into building You use a hood or SP or some way of testing CFM into building supply grills total. Temp diff X 1.08 X CFM = BTU's. 50 X 1.08 X 1000 = 54,000 BTU's 54/100 is 54%
Installation and proper sizing is important to getting the best performance out of your furnace. If the furnace is rated to be a certain efficiency, it can only achieve that ideal if it sized correctly, etc. Even a condensing furnace only operates in condensing mode only part of the time. A high efficiency furnace that does condensing is "squeezing" more of the heat from the combustion process and putting it into your home, rather than dumping it outside your home in the form of exhaust. That's good. It saves you money on your utility bill, because you get all the heat you need while burning less petroleum-based fuel.