Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Closing Entries

Financial Accounting

3. Accrual Accounting Concepts

Closing Entries

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Multiple Choice

Which of the following items is NOT entered on the closing statement as a credit to the buyer?

Unpaid property taxes due from the previous year

Earnest money deposit

Purchase price of the property

Prepaid property taxes by the seller

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Verified step by step guidance

Understand the concept of a closing statement: A closing statement is a financial summary prepared during the closing of a real estate transaction. It details credits and debits for both the buyer and the seller.

Identify what constitutes a credit to the buyer: Credits to the buyer typically include amounts that reduce the buyer's financial obligation, such as earnest money deposits, prepaid expenses by the seller, or adjustments for property taxes.

Analyze each option provided: Determine whether each item listed is typically credited to the buyer. For example, unpaid property taxes from the previous year are usually a debit to the buyer, as the buyer assumes responsibility for these taxes.

Clarify the role of prepaid property taxes by the seller: If the seller has prepaid property taxes, this amount is credited to the buyer because the buyer benefits from the seller's prepayment.

Conclude which item is NOT a credit to the buyer: Based on the analysis, unpaid property taxes due from the previous year are not credited to the buyer, as they represent an obligation the buyer must pay.