Multiple Choice
Which of the following is NOT a potential benefit of collaborative strategies involving alliances in accounting?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
If a buyer assumes the seller’s mortgage, which of the following is a true statement?
A
The buyer becomes responsible for making future mortgage payments.
B
The mortgage is automatically paid off at closing.
C
The lender is not required to approve the assumption.
D
The seller remains solely responsible for the mortgage after the sale.
Verified step by step guidance1
Understand the concept of mortgage assumption: When a buyer assumes the seller's mortgage, the buyer agrees to take over the responsibility of the existing loan, including future payments.
Clarify the implications for the buyer: The buyer becomes responsible for making future mortgage payments as part of the agreement to assume the mortgage.
Analyze the statement about automatic payoff: A mortgage is not automatically paid off at closing when it is assumed; instead, the buyer continues the payment schedule.
Evaluate the lender's role: In most cases, the lender must approve the mortgage assumption to ensure the buyer meets the financial qualifications to take over the loan.
Examine the seller's responsibility: Once the mortgage is assumed by the buyer, the seller is typically released from liability, meaning the seller does not remain solely responsible for the mortgage after the sale.
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