Multiple Choice
Which type of budgeting matches the amount of spending to the level of activity that is required?
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1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following is a characteristic of a performance bonus?
A
It is a fixed monthly salary paid regardless of performance.
B
It is an additional payment awarded based on achieving specific targets or goals.
C
It is a type of expense recorded as depreciation.
D
It is a mandatory deduction from an employee's paycheck.
Verified step by step guidance1
Understand the concept of a performance bonus: A performance bonus is an additional payment awarded to employees based on their achievement of specific targets or goals. It is not a fixed salary, mandatory deduction, or related to depreciation.
Eliminate incorrect options: Review each option and determine whether it aligns with the definition of a performance bonus. For example, a fixed monthly salary is unrelated to performance, and depreciation is an accounting expense, not a bonus.
Focus on the correct option: Identify the option that matches the definition of a performance bonus, which is an additional payment tied to achieving specific targets or goals.
Relate the concept to accounting: In financial accounting, performance bonuses are recorded as an expense under employee compensation, as they represent additional payments made by the company.
Apply the concept: Use this understanding to answer similar questions or analyze how performance bonuses impact financial statements, such as the income statement where they increase employee-related expenses.
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