A Compensation System Based on Time Is Most Appropriate for Jobs

question 94

Multiple Choice

A compensation system based on time is most appropriate for jobs in which

• A) performance is not easy to measure.
• B) responsibilities are difficult to understand.
• C) fringe benefits are an important part of the compensation offered.
• D) commissions make up a significant portion of compensation received.

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Definitions:

Recognize Income

Recognize income refers to the point in time when income is considered earned and must be reported for tax purposes.

Tax-exempt

Income or transactions that are legally excluded from taxation.

Economic Benefit

The advantage or gain received from a financial transaction or situation, which may have tax implications or influence fiscal decisions.

Nontaxable Return of Capital

A payment received from an investment that is not taxed because it is considered a portion of the original investment's cost being returned to the investor.