Takato Wants to Set Up Either a Gain-Sharing Plan or a Profit-Sharing

question 50

Multiple Choice

Takato wants to set up either a gain-sharing plan or a profit-sharing plan,but doesn't know the difference between the two.You tell him that

• A) profit-sharing plans are generally preferred by employees.
• B) gain-sharing is based on cost savings from productivity improvements,while profit-sharing is based on the firm's profits.
• C) gain-sharing plans generally result in more money being given to employees than profit-sharing plans do.
• D) there is really very little difference in the two types of plans.
• E) gain-sharing plans are generally used only in the public sector,while profit-sharing plans are generally used only in the private sector.

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Definitions:

Legislation

Laws or statutes enacted by a government's legislative body.

Limited Partnership Agreement

A contract among partners in which some are liable only up to the amount of their investments while others are fully liable.

Limited Partners

Investors in a limited partnership who contribute capital but do not participate in management and whose liability for the partnership's debts is limited to their investment.

General Partners

Individuals in a partnership who share unlimited personal liability for the debts and obligations of the business, and who typically take part in managing the operations of the partnership.