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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Sydney Porter · Accepted Answer

Final Answer : E, Explanation :  The primary difference between profit-sharing and gain-sharing plans is that 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. Profit-sharing plans are often a one-time payment based on performance accomplishments, while gain-sharing plans provide regular payments. Gain-sharing plans also tend to pay in proportion to performance contributions rather than seniority and experience. Both plans are monetary forms of compensation.

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