Does dementia affect hearing?

She is no longer early dementia, but well into the moderate stage. A person with dementia may have good hearing, but bad listening. By that I mean her brain cannot properly process the incoming information.
For example, an elderly woman near me saw smoke in her house, but could not understand why it was there. She called her son who lives 300 miles away for an explanation. He in turn called the daughter, who lives across the street from mom and dad. She got them out of the house, but it was a total loss. Dad was charged with starting a fire. Both parents are now in memory care.

ataloss, it sounds like your mother may be past the early stages of dementia. Imaging sounds and people who are not really there are very common with Alzheimer's. One thing I would recommend is to read up on dementia so that you'll learn what to expect and how to respond. Sometimes validating their concerns, then distracting them will work. It still won't help that these things happen in the middle of the night and wake you. That is one of the downsides to helping someone with dementia.

There is a menu across the top of the page here that has a lot of information about diseases common in elderly people. It is a good starting place to learn about dementia. There are also several threads devoted to handling the problems that come up when dealing with dementia. I think you will gain a lot of insight reading what others have written and knowing that you are not alone in what is happening.

Ataloss, I hear knocking at door/door bell ring which awaken me at night. It feels so real, but one look at the cats tell me it was part of a dream as none of the cats are in panic mode like when there is actually someone at the door. Thus, I think that part of what your Mom is going through isn't part of dementia. For me, it is part of being stressed related.