Which of the following statements best describes the term 'salary' in accounting?

• A. A one-time payment made to suppliers for goods purchased.
• B. A fixed regular payment made by an employer to an employee, typically expressed on a monthly or annual basis.
• C. A variable payment made to employees based on hours worked.
• D. A periodic payment made to shareholders as a return on their investment.

Answer: (B)

Verified step by step guidance

1. Understand the term 'salary' in accounting: Salary refers to a fixed regular payment made by an employer to an employee, typically expressed on a monthly or annual basis. It is distinct from wages, which are often variable and based on hours worked.
2. Eliminate incorrect options: Review each option provided in the problem and identify why it does not align with the definition of 'salary.'
3. Option 1: 'A one-time payment made to suppliers for goods purchased' is incorrect because this describes a payment for goods or services, not employee compensation.
4. Option 3: 'A variable payment made to employees based on hours worked' is incorrect because this describes wages, not salary, which is fixed and regular.
5. Option 4: 'A periodic payment made to shareholders as a return on their investment' is incorrect because this describes dividends, not salary. The correct answer is the second option, which matches the definition of salary.