Bonus
Accounting glossary · Understand, connect, apply
A bonus is additional compensation paid or payable to an employee under an arrangement such as a performance award or contractual incentive.
Example
Employees earn a year-end bonus based on completed service, and the employer assesses whether an expense and liability must be recognized before payment.
Remember the difference
The recognition date is not automatically payday. Contractual terms, service conditions and any constructive obligation matter.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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