Practice Test Geeks(CAEC) Canadian Adult Education Credential Practice Test
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Financial Literacy and Personal Finance Flashcards

7 cards from real CAEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Literacy and Personal Finance flashcards as text

  1. What does CRA stand for in Canada?

    Answer: Canada Revenue Agency

    CRA stands for the Canada Revenue Agency, the federal body responsible for administering tax laws, collecting taxes, and delivering government benefit programs.

  2. What is a T4 slip used for in Canada?

    Answer: To report employment income and tax deductions for income tax purposes

    A T4 slip (Statement of Remuneration Paid) is issued by employers to report an employee's annual income and tax deductions to both the employee and the CRA.

  3. What is a Tax-Free Savings Account (TFSA)?

    Answer: A registered account where investment growth and withdrawals are not subject to tax

    A TFSA allows Canadians to save and invest money where all growth and withdrawals are completely tax-free, although contributions are made with after-tax dollars.

  4. What is the main tax benefit of contributing to a Registered Retirement Savings Plan (RRSP)?

    Answer: Contributions reduce your taxable income in the year they are made

    RRSP contributions are deductible from your taxable income, which reduces the amount of tax you owe in the year you make the contribution.

  5. What is compound interest?

    Answer: Interest earned on both the principal and previously accumulated interest

    Compound interest is calculated on both the initial principal and the interest that has already been added, causing savings to grow progressively faster over time.

  6. What is a tax deduction?

    Answer: An amount subtracted from your income before calculating the taxes owed

    A tax deduction reduces your taxable income rather than the tax amount directly, so you pay taxes on a lower income figure, which indirectly reduces your tax bill.

  7. What is a Guaranteed Investment Certificate (GIC)?

    Answer: A deposit product offered by financial institutions that guarantees a fixed interest rate over a set term

    A GIC is a secure Canadian investment product that locks in your money for a fixed period and guarantees both the return of your principal and a set interest rate.