What Is the Primary Difference Between Profit-Sharing and Gain-Sharing Plans

question 56

Multiple Choice

What is the primary difference between profit-sharing and gain-sharing plans?

• A) Profit-sharing plans provide one-time payments based on performance accomplishments, whereas gain-sharing plans provide weekly and/or monthly payments.
• B) Profit-sharing plans pay increases in proportion to performance contributions, whereas gain-sharing plans pay in proportion to seniority and experience.
• C) Profit-sharing plans are most common at the executive level, whereas gain-sharing plans are most common at the lower levels.
• D) Profit-sharing plans are monetary forms of compensation, whereas gain-sharing plans are nonmonetary.
• E) Profit-sharing plans distribute to employees a proportion of net profits earned by the organization, whereas gain-sharing plans allow employees to share gains realized by their efforts.

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Definitions:

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