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

1. Introduction to Accounting

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

When buying a home, the lender may hold money in an escrow account to pay which of the following?

Real estate agent commissions

Property taxes and homeowner's insurance

Monthly mortgage principal only

Homeowner association (HOA) dues

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Verified step by step guidance

Understand the concept of an escrow account: An escrow account is a financial arrangement where a third party holds funds on behalf of two other parties. In the context of home buying, lenders use escrow accounts to ensure that certain expenses related to the property are paid on time.

Identify the typical expenses covered by an escrow account: These usually include property taxes and homeowner's insurance. These are recurring costs that are essential for maintaining ownership and protecting the property.

Eliminate incorrect options: Real estate agent commissions are paid at the time of purchase and are not recurring expenses. Monthly mortgage principal is part of the loan repayment and is not held in escrow. Homeowner association (HOA) dues are typically paid directly by the homeowner and are not managed through escrow.

Focus on the correct answer: Property taxes and homeowner's insurance are recurring expenses that lenders often require to be paid through an escrow account to ensure timely payment and avoid penalties or lapses in coverage.

Summarize the reasoning: Escrow accounts are designed to manage essential recurring costs associated with homeownership, specifically property taxes and homeowner's insurance, as these protect the lender's investment in the property.