Answered

Earned income and capital gains (or "portfolio income") are acquired in different ways. Which statement describes how they are different?

A. Earned income and capital gains are both based on the number of hours you work.
B. Earned income is payment for employment, while capital gains are produced by your investments.
C. Capital gains are received if you manage the company, but earned income is received if you are an employee of the company.
D. Earned income is when you make the investment directly, but capital gains are when someone else has managed your investments.



Answer :

GinnyAnswer

Final answer:

Earned income is payment for employment, while capital gains are profits earned from investments, showcasing the difference in income sources.


Explanation:

Earned income is payment for employment, such as wages, salaries, commissions, or tips that individuals receive for their work. On the other hand, capital gains are profits earned from investments, like selling stocks or real estate for a higher price than originally paid. The key difference lies in the sources of income: earned income is directly related to employment, while capital gains stem from investment activities.


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