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On what basis is a performance bonus received by an employee included in the income method?

Answer and explanation

Correct answer: It is an additional reward for labour service

A performance bonus is paid because the employee has supplied labour services during the current accounting period and achieved specified work results. It is therefore an additional part of compensation of employees, just like a salary or wage incentive. It is not a gift, because it is connected with employment, and it is not a capital gain or the proceeds from selling a used good. Thus, option A is correct.

Related tags

Performance BonusEmployee CompensationLabour ServiceIncome MethodFactor IncomeGdp And WelfareNational Income And Related AggregatesEconomics

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