In addition to their monthly salary, the employees of a firm received an extra cash payment at the end of the year as a reward for their work. Which financial incentive is this?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Bonus
Option (1) Perquisites — Incorrect. Perquisites are fringe benefits such as car allowance, housing, medical aid and education of children. They are facilities, while the payment here is cash.
Option (2) Bonus — Correct. A bonus is an incentive offered over and above the wages or salary. The year-end cash reward comes on top of the monthly salary.
Option (3) Pay and allowances — Incorrect. Pay and allowances are the salary itself: basic pay, dearness allowance and other allowances. The payment here is extra to the salary.
Option (4) Retirement benefits — Incorrect. Provident fund, pension and gratuity give financial security after retirement. The employees here get the payment while they are still working.
NCERT (2026-27 Edition): “(i) Pay and allowances: For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance and other allowances. Salary system consists of regular increments in the pay every year and enhancement of allowances from time-to-time. In some business organisations, pay hike and increments may be linked to performance. “(vi) Retirement Benefits: Several retirement benefits such as provident fund, pension, and gratuity provide financial security to employees after their retirement. This acts as an incentive when they are in service in the organisation. |