Question

The determinant of bonus decision is

• A. Amount of profit
• B. Liquidity of funds
• C. Age of the company
• D. All of these

Hint:

Bonus is not fixed — it depends on company profits, liquidity, and maturity.

Answer 1

The Correct Option is D

Step 1: Meaning of bonus decision.
Bonus is the extra payment given to employees apart from salary, usually based on company performance.
Step 2: Factors influencing bonus.
- Amount of profit: Higher profits allow larger bonuses.
- Liquidity of funds: Even if profit is high, bonuses cannot be paid without sufficient liquid cash.
- Age of company: Older and established companies are in a better position to distribute bonuses compared to new firms.
Step 3: Option analysis.
- (A) Amount of profit: Correct but incomplete.
- (B) Liquidity of funds: Correct but only one factor.
- (C) Age of the company: Also correct, but not the only factor.
- (D) All of these: Correct, as all factors together determine bonus decisions.
Step 4: Conclusion.
Bonus decisions depend on profit, liquidity, and the age of the company.