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:

Accounts Receivable

Funds that customers owe to a company for products or services already provided but not yet compensated.

Sales Revenue

The total income received by a company from its sales of goods or services, before any expenses are subtracted.

Prepaid Expenses

Costs for goods or services that are paid for in advance of being used or consumed, recognized as assets on a balance sheet.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.