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 usually not prorated at closing?

Security deposits

Prepaid insurance

Accrued interest

Property taxes

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Verified step by step guidance

Understand the concept of prorated items: Prorated items are expenses or revenues that are divided between the buyer and seller based on the closing date of a transaction. These items are typically adjusted to ensure fairness in the financial settlement.

Review each option: Security deposits, prepaid insurance, accrued interest, and property taxes. Consider whether each item is typically prorated during a real estate closing.

Analyze security deposits: Security deposits are usually not prorated because they are held by the landlord or property owner and are not considered an expense or revenue that needs to be divided between the buyer and seller.

Evaluate prepaid insurance: Prepaid insurance is often prorated because it represents an expense that has been paid in advance and needs to be allocated based on the closing date.

Assess accrued interest and property taxes: Both accrued interest and property taxes are typically prorated because they represent financial obligations that are shared between the buyer and seller depending on the time of ownership.