How is the Net Salary (NS) of an employee determined? Option 1: NS = BPE + PF + TDS Option 2: NS = TE – TD Option 3: NS = TE + TD Option 4: NS = BPE – Allowances

Answer: NS = TE – TD. Solution: Net Salary is the actual amount an employee receives in hand after all deductions have been made from their total earnings. The formula for Net Salary is: Net Salary (NS) = Total Earnings (TE) – Total Deductions (TD) Total Earnings (TE) include: - Basic Salary - Dearness Allowance (DA) - House Rent Allowance (HRA) - Medical Allowance - Conveyance Allowance - Overtime pay - Any other allowances or earnings Total Deductions (TD) include: - Provident Fund (PF) - Tax Deducted at Source (TDS) - Employee State Insurance (ESI) - Professional Tax - Loan repayments - Any other deductions The other options are incorrect because: Option 1 adds deductions to basic pay, which would incorrectly increase the net salary. Option 3 adds total deductions to total earnings, which is mathematically wrong as deductions reduce the net amount. Option 4 subtracts allowances from basic pay, but allowances are part of earnings and should be added, not subtracted. Therefore, Option 2 correctly represents that Net Salary is what remains after subtracting all deductions from total earnings.

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Computerised Accounting

How is the Net Salary (NS) of an employee determined?

NS = BPE + PF + TDS

NS = TE – TD

NS = TE + TD

NS = BPE – Allowances

✅ Correct Option: 2

Net Salary is the actual amount an employee receives in hand after all deductions have been made from their total earnings.

The formula for Net Salary is:

Net Salary (NS) = Total Earnings (TE) – Total Deductions (TD)

Total Earnings (TE) include:

Basic Salary
Dearness Allowance (DA)
House Rent Allowance (HRA)
Medical Allowance
Conveyance Allowance
Overtime pay
Any other allowances or earnings

Total Deductions (TD) include:

Provident Fund (PF)
Tax Deducted at Source (TDS)
Employee State Insurance (ESI)
Professional Tax
Loan repayments
Any other deductions

The other options are incorrect because:

Option 1 adds deductions to basic pay, which would incorrectly increase the net salary.

Option 3 adds total deductions to total earnings, which is mathematically wrong as deductions reduce the net amount.

Option 4 subtracts allowances from basic pay, but allowances are part of earnings and should be added, not subtracted.

Therefore, Option 2 correctly represents that Net Salary is what remains after subtracting all deductions from total earnings.

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(A) It is the function which adds the cells as per given specified criteria	(I) ROUND
(B) It is the function to rounds a number to specified number of digits.	(II) CONCATENATE
(C) It is used to get the number of the entries in a number field (including date also) i.e. in a range or array of numbers.	(III) SUMIF
(D) This function joins two or more text strings into one text string	(IV) COUNT

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How is the Net Salary (NS) of an employee determined?

Solution

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