Entrepreneurship and Small Business (ESB) Certification Practice Exam

What is the typical payment method based on hours worked?

1. Hourly

2. Commission

3. Salary

4. Bonus

The correct answer is: Hourly

The typical payment method based on hours worked is hourly compensation. This structure involves paying employees a set rate for each hour they work, which allows for flexibility in the number of hours an employee may work each week. Hourly pay is commonly used in many industries, particularly for positions that do not have a predictable workload or for roles that involve part-time work, temporary assignments, or seasonal employment. In contrast, commission-based payment ties earnings to sales performance, which does not reflect hours worked. Salary represents a fixed annual compensation regardless of hours, and bonuses are additional payments that reward performance but are not directly tied to hours worked. This distinction is essential for understanding the various compensation methods available in the business context.