What Is the Fundamental Difference Between Profit-Sharing and Gainsharing

question 117

Multiple Choice

What is the fundamental difference between profit-sharing and gainsharing?

• A) Profit-sharing rewards employees based on the profit the company earns, while gainsharing rewards employees on the basis of productivity improvements.
• B) Profit-sharing has been shown to be more motivating for employees than gainsharing.
• C) Profit-sharing allows more specific measurement of improvements than gainsharing.
• D) Profit-sharing focuses on group rewards, while gainsharing focuses on individual rewards.
• E) Profit-sharing is used mostly by large companies, while gainsharing is used mostly by small companies.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, represented as a financial charge for the privilege of borrowing money.

Bond Issuer

The entity, either a company or government, that borrows funds by issuing bonds.

Bond Premium

The additional amount paid over the face value of a bond, reflecting market interest rates lower than the bond's coupon rate.

Liability

Financial obligations or debts owed by a company to external parties, such as loans, accounts payable, or mortgages.