DECA Human Resources Management Practice Exam

What kind of compensation does a salary represent?

1. Payment based on hours worked

2. Fixed amount of compensation for work performed

3. Commissions on sales

4. Bonuses for exceptional performance

The correct answer is: Fixed amount of compensation for work performed

A salary represents a fixed amount of compensation for work performed, typically expressed as an annual figure that is divided into regular payments, such as monthly or bi-weekly. This compensation structure ensures employees receive a predetermined amount regardless of the number of hours worked or their specific output, providing financial stability and predictability. In contrast, payment based on hours worked is associated with hourly wages, which vary depending on the actual hours an employee clocks in. Commissions are performance-based incentives tied to sales figures, while bonuses are typically awarded based on individual or organizational performance above standard expectations. Therefore, the nature of a salary as consistent and set makes it distinct from these other forms of compensation.