Which of the Following Statements Is True About Compensations and Incentives

question 2

Multiple Choice

Which of the following statements is true about compensations and incentives?

• A)Bonuses are paid when employees meet certain performance objectives.
• B)Bonuses are always discretionary in nature.
• C)Salary usually includes stock-based compensation.
• D)Nondiscretionary compensations are given for any reason a principal desires.

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Definitions:

Consolidated Income

The total net income of a parent company and its subsidiaries, after accounting for the ownership interest of noncontrolling shareholders.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.

Accrual-Based Net Income

The measure of a company's financial performance that includes both cash and non-cash items, recognizing revenues when they are earned and expenses when they are incurred.

Operating Income

Income generated from the regular business operations of a company, excluding items such as investment income, interest expense, and other non-operational income or expenses.