Future Business Leaders of America (FBLA) Accounting Practice Test

What does wage refer to?

1. A bonus based on sales

2. A fixed amount of money paid per year

3. The amount paid to an employee per hour worked

4. A one-time payment for a completed project

The correct answer is: The amount paid to an employee per hour worked

Wage refers to the amount paid to an employee per hour worked. This is a form of compensation where employees receive payment based on the actual time they work, typically calculated hourly. Wages are commonly associated with jobs that pay workers based on the number of hours they put in, and this structure allows for variability in earnings based on hours worked, which can fluctuate due to factors like overtime or part-time employment. Understanding the distinction is important: a bonus based on sales is performance-related and not guaranteed; a fixed salary does not change regardless of hours worked; and a one-time payment for a completed project suggests a contractual payment rather than regular pay for time worked. In contrast, wages provide a straightforward measurement of earnings based on time, making it a fundamental concept in understanding employee compensation.