An employee's gross pay is $3,800 and total deductions are $1,140. What is the net pay?
Correct Answer
B) $2,660
Net pay = Gross pay - Total deductions = $3,800 - $1,140 = $2,660. Net pay is the amount the employee actually receives after all deductions for taxes, insurance, and other withholdings.
Why This Is the Correct Answer
Net pay is calculated by subtracting all deductions from gross pay. This represents the actual amount an employee takes home after taxes, insurance premiums, retirement contributions, and other withholdings are removed. The calculation is straightforward: $3,800 (gross) - $1,140 (deductions) = $2,660 (net). This is a fundamental payroll concept that contractors must understand for managing employee compensation.
Why the Other Options Are Wrong
Option A: $4,940
This option ($4,940) incorrectly adds the deductions to the gross pay instead of subtracting them, which would give an employee more money than they earned.
Option C: $3,800
This option ($3,800) represents the gross pay before any deductions, not the net pay that the employee actually receives.
Option D: $1,140
This option ($1,140) represents only the total deductions amount, not the net pay that goes to the employee.
Memory Technique
Think 'NET catches what's LEFT' - net pay is what's left after deductions are subtracted from gross pay.
Reference Hint
Look up payroll calculations and employee compensation in the business management or accounting sections of your contractor reference materials.
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