An employee's gross pay is $3,800 and total deductions are $1,140. What is the net pay?
Correct Answer
C) $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
Option B ($2,660) is correct because net pay is calculated by subtracting total deductions from gross pay. Using the formula: Net Pay = Gross Pay - Total Deductions = $3,800 - $1,140 = $2,660. This represents the actual amount the employee receives in their paycheck after all taxes, insurance premiums, retirement contributions, and other withholdings have been deducted from their gross earnings.
Why the Other Options Are Wrong
Option A: $3,800
Option C ($3,800) is incorrect because it represents the gross pay before any deductions are subtracted. This would only be the net pay if there were zero deductions, but the problem states total deductions are $1,140.
Option D: $1,140
Option D ($1,140) is incorrect because it represents only the total deductions amount, not the net pay. This would be the amount withheld from the employee's paycheck, not what they actually receive as take-home pay.
Memory Technique
Remember 'NET catches what's LEFT': Net pay is what's left after deductions are caught and removed from gross pay. Think of a fishing net catching deductions - what falls through is your net pay.
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