Fundamental Payroll Certification (FPC) Practice Exam 2025 – Comprehensive All-in-One Guide to Exam Success!

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Which best describes a salary?

Payment based on hourly work

A fixed amount paid annually

A salary is best described as a fixed amount paid annually, which serves as a consistent form of compensation for an employee's work. Unlike hourly wages, which fluctuate based on the number of hours worked, a salary remains static over a given period, typically paid out on a regular schedule (such as monthly or bi-weekly). This arrangement allows employees to have a predictable income, making it easier for them to plan their finances.

Other forms of compensation, such as payment based on hourly work, commission, or project-based payouts, vary depending on different parameters like hours worked, sales performance, or project completion, which distinguishes these models from the security and consistency that a salaried position provides.

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Compensation based on commission

Payout after the end of each project

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