Dental Office Management Practice Exam

Net pay refers to the amount an employee takes home after all deductions have been made from their gross earnings. Gross earnings include all earnings before any deductions, such as taxes, retirement contributions, health insurance premiums, and other withholdings. Therefore, net pay is calculated after these deductions are considered.

When evaluating the options, stating that net pay is calculated as earnings before any deductions are taken is indeed false. This distinction clarifies the difference between gross pay, which is the total earnings, and net pay, which is the actual amount received by the employee. Understanding this difference is crucial for accurate payroll calculations and for employees to know how much they will actually receive in their paychecks.