Income Received by Self-Employed Business Owners
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Application
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
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Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
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Application
Ability to put information to use / to use knowledge for relevant, practical purposes
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Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Determine
To ascertain / to come to a decision, such as by investigation or reasoning
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
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Hold cursor over or click on each term to read its definition.
Additional Knowledge Expected of CFP Professionals
- Explain the factors the Canada Revenue Agency considers when determining whether an individual is self-employed or an employee.1
- Explain that any undertaking for the purposes of business must have a reasonable expectation of profit in order for income earned to be classed as self-employment income and allowable deductions to be permitted against such income.2
- Explain the factors the Canada Revenue Agency considers when determining if a business has a reasonable expectation of profit.3
- Identify the types of self-employment income.4
- Explain the tax impact of receiving each type of income.
- Estimate the tax impact of receiving each type of income.
- Explain the methods of accounting used by businesses.5
- Cash
- Accrual
