What types of payments are included under compensation?

Compensation encompasses various forms of payment received by individuals for their services or work performed. The correct answer identifies bonuses and professional fees as types of compensation. Bonuses are additional payments provided by employers based on performance or achievement of company goals, and they are considered a form of compensation. Professional fees are payments received by individuals for services rendered in a professional capacity, such as consulting services, legal services, or healthcare services, and these are also classified as compensation because they directly relate to the provision of labor or expertise.

Wages and scholarships, while relevant to remuneration, generally do not fit the definition of compensation in the professional sense—wages are indeed compensation, but scholarships are usually categorized as educational assistance rather than payment for services. Rental income is derived from leasing property and is not considered compensation for services; it is income from an asset. Capital gains arise from the sale of an asset for more than its purchase price and similarly do not relate to compensation for work performed. These distinctions highlight why bonuses and professional fees are the proper classifications under compensation.