Multiple Choice
Which of the following is NOT considered an example of income in financial accounting?
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1. Introduction to Accounting
Types of Accounting
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Which of the following best defines employee benefits in the context of accounting?
A
The profits earned by a company after deducting all expenses.
B
Non-wage compensation provided to employees in addition to their normal wages or salaries, such as health insurance, retirement plans, and paid leave.
C
The total amount of salary paid to employees before any deductions.
D
The process of recording and reporting all financial transactions of a business.
Verified step by step guidance1
Understand the term 'employee benefits' in accounting. Employee benefits refer to non-wage compensation provided to employees in addition to their regular wages or salaries.
Examples of employee benefits include health insurance, retirement plans, paid leave, and other perks offered by employers to support employees' well-being.
Differentiate employee benefits from other financial terms such as 'profits earned,' which refers to the net income of a company, and 'total salary paid,' which is the gross salary before deductions.
Recognize that employee benefits are part of a company's expenses and are recorded in financial statements under operating expenses or employee compensation costs.
Ensure clarity by excluding unrelated definitions, such as the process of recording and reporting financial transactions, which pertains to general accounting practices rather than employee benefits.
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