Chapter 12 Flashcards
This term refers to the presentation of financial data, including balance sheets, income statements and other supporting statements intended to communicate an entity’s financial position at a point in time:
Select one:
a. Financial Statements
b. Income Statement
c. Balance Sheet
d. Creditor Insurance Application
Correct Answer: Financial Statements
Rationale: Financial Statements refers to the presentation of financial data, including balance sheets, income statements and other supporting statements intended to communicate an entity’s financial position at a point in time.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: Financial Statements
This term refers to a document provided to an individual by his or her employer, which is often required by a lender to verify an applicant’s employment:
Select one:
a. Pay Stub
b. Job Letter
c. T4A
d. T4
Correct Answer: Job Letter
Rationale: A Job Letter a document provided to an individual by his or her employer. This document is often required by a lender, in addition to other documentation, to verify an applicant’s employment as well as income.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: Job Letter
This is a form that the federal government issues when a personal tax return has been completed and filed:
Select one:
a. Job Letter
b. T4
c. Notice of Assessment (NOA)
d. T4A
Correct Answer: Notice of Assessment (NOA)
Rationale: A Notice of Assessment (NOA) is a form that the federal government issues when a personal tax return has been completed and filed.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: Notice of Assessment (NOA)
Which of the following is not one of the documents that is typically required for an employee to supply to a lender?
Select one:
a. T4
b. Pay Stubs
c. Letter of Employment
d. Marriage Certificate
Correct Answer: Marriage Certificate
Rationale: A Marriage Certificate is not one of the documents that is typically required for an employee to supply to a lender, whereas the other options are all relevant.
Relevant section(s) of the textbook: 12.1 Required Documentation
The correct answer is: Marriage Certificate
Which of the following is not one of the documents that is typically required for a self-employed individual to supply to a lender?
Select one:
a. Business Cheque
b. Financial Statements
c. Business License
d. Notice of Assessment (NOA)
Correct Answer: Notice of Assessment (NOA)
Rationale: A Notice of Assessment (NOA) is not one of the documents that is typically acceptable for a self-employed individual to supply to a lender, whereas the other options are all relevant.
Relevant section(s) of the textbook: 12.1 Required Documentation
The correct answer is: Notice of Assessment (NOA)
This term refers to a document provided to an individual by his or her employer to summarize income for a given one-year period:
Select one:
a. T4A
b. Pay Stub
c. T4
d. Job Letter
Correct Answer: T4
Rationale: A T4 is a document provided to an individual by his or her employer to summarize income for a given one-year period. This document is typically obtained by a broker/agent when the applicant has employment income such as salaried or hourly income.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: T4
This is a document used by an insurance company to determine the eligibility of an applicant for creditor insurance:
Select one:
a. Income Statement
b. Balance Sheet
c. Creditor Insurance Application
d. Financial Statements
Correct Answer: Creditor Insurance Application
Rationale: A Creditor Insurance Application is a document used by an Insurance Company to determine the eligibility of an applicant for creditor insurance. Creditor insurance has become a regular offering in a mortgage transaction.
Relevant section(s) of the textbook: 12.4 Other Documentation
The correct answer is: Creditor Insurance Application
This term refers to a document provided to an individual by his or her employer and is often required by a lender in addition to a job letter and/or other income verification:
Select one:
a. Pay Stub
b. T4A
c. T4
d. Job Letter
Correct Answer: Pay Stub
Rationale: A Pay Stub is a document provided to an individual by his or her employer and is often required by a lender in addition to a job letter and/or other income verification. A paystub is generally used to prove that the applicant is still actively employed by the employer since a job letter may be one or more weeks old.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: Pay Stub
This document details the amount of money that the business made or lost over a specific period of time, typically a month, a quarter or a year:
Select one:
a. Financial Statements
b. Balance Sheet
c. Income Statement
d. Creditor Insurance Application
Correct Answer: Income Statement
Rationale: An Income Statement details the amount of money that the business made or lost over a specific period of time, typically a month, a quarter or a year.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: Income Statement
This term refers to a document provided to an individual by his or her employer which summarizes income from various sources and is used by the individual for submitting an annual income tax return:
Select one:
a. Job Letter
b. Pay Stub
c. T4
d. T4A
Correct Answer: T4A
Rationale: A T4A is a document provided to an individual by his or her employer which summarizes income from various sources and is used by the individual for submitting an annual income tax return. This document is typically obtained by a broker/agent when the applicant has commission or contract income, such as a commissioned salesperson or independent contractor.
Relevant section(s) of the textbook: 12.2 Income Documentation
The correct answer is: T4A
