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

Adjusting Entries: Accrued Expenses

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Expenses

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Accrued interest on an assumed mortgage loan is entered on the closing statement as:

A debit to the seller and a credit to the buyer

A debit to both the seller and the buyer

A credit to the seller and a debit to the buyer

A credit to both the seller and the buyer

Previous problemNext problem

Verified step by step guidance

Understand the concept of accrued interest: Accrued interest refers to the interest that has accumulated on a loan but has not yet been paid. In the context of a mortgage loan, this interest is typically calculated up to the closing date of the transaction.

Identify the parties involved: In a real estate transaction, the seller is responsible for the mortgage loan up to the closing date, while the buyer assumes responsibility for the loan after the closing date.

Determine the impact on the closing statement: Since the seller owes the accrued interest up to the closing date, it is recorded as a debit to the seller. Conversely, the buyer assumes the mortgage loan and receives a credit for the accrued interest.

Analyze the options provided: The correct entry must reflect the financial responsibility of the seller for the accrued interest and the buyer's assumption of the loan. This aligns with the option 'A debit to the seller and a credit to the buyer.'

Conclude the reasoning: The closing statement ensures that financial obligations are accurately allocated between the seller and the buyer. Accrued interest is debited to the seller because it is their responsibility, and credited to the buyer as part of the loan assumption.