Future Business Leaders of America (FBLA) Agribusiness Practice Test

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What is another term for gratuity in a compensation context?

  1. Base salary

  2. Commission

  3. Tips

  4. Bi-weekly pay

The correct answer is: Tips

In a compensation context, gratuity refers to additional payment given to an employee for services rendered, often in the form of a gesture of appreciation from a customer. The most common way this is expressed is through tips, which are typically given in service industries such as hospitality. Tips serve as a form of reward for good service, separate from the standard wages or salary an employee receives. This differentiates them from a base salary, which is a fixed amount of pay, or commission, which is a payment based on sales performance. Additionally, bi-weekly pay refers to the schedule on which employees receive their salary and is not synonymous with gratuity. Hence, tips accurately capture the essence of gratuity in this context, making it the correct term to use.

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