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.
Frequently asked questions
What is the correct answer to this question?
It is an additional reward for labour service
Why is this the correct answer?
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.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
