Colorado Real Estate Closings and Settlement
Complete Actual Exam Study Questions with
100% Correct Answers Already Graded A+
1. A water bill of 31.85 was paid in advance for the months of July through
September. What is the entry for the proration when closing is on September
20?
A. 28 debit seller, credit buyer
B. 3.81 credit seller, debit buyer
C. 3.81 debit seller, credit buyer
D. 28 credit seller, debit buyer - ANSWER B. 3.81 credit seller, debit
buyer
Water paid in advance will be a buyer-owes-seller entry for the buyer's portion
of the month. The buyer has only 11 days out of 91 (small side) (credit seller,
debit buyer)
2. Who will always be charged for unpaid taxes for the preceding year?
A. the seller
B. There is no entry; this will be paid from the tax reserve
C. the buyer
D. the broker - ANSWER A. the seller
Unpaid taxes for the previous year may be a lien against the property and will
always be the obligation of the seller who lived there (debit seller, credit broker
to pay the bill).
,3. The owner's title insurance premium will normally be entered on the six-
column worksheet as
A. debit buyer, credit seller
B. debit seller, credit buyer
C. debit seller, credit broker
D. debit buyer, credit broker - ANSWER C. debit seller, credit broker
The residential contract to buy and sell states that the seller must provide title
insurance (debit seller, credit broker to pay the bill).
4. What is the entry for a loan being assumed?
A. debit seller, debit buyer
B. credit seller, debit buyer
C. debit seller, credit buyer
D. credit seller, credit buyer - ANSWER C. debit seller, credit buyer
The answer is debit seller, credit buyer. An assumed loan is a debit to the seller,
who will not receive this money, and a credit to the buyer, who does not need to
bring this amount to closing.
5. Who always pays to start a lender reserve?
A. the lender
B. the seller
C. the buyer
D. negotiable - ANSWER C. the buyer
,The answer is the buyer. The buyer is responsible for setting up any reserve
accounts (debit buyer).
6. The broker credit total column is a combination of
A. debits for bills paid and the amount of the check due to the seller
B. credits for bills paid and the amount of the check due to the seller
C. credits for bills paid and the amount of the check from the buyer
D. debits for bills due and the amount owed by the buyer - ANSWER B.
credits for bills paid and the amount of the check due to the seller
The broker credit (check paid) column represents credits for bills the broker
will pay and the amount of the check for the seller
7. A duplex's rents are 1,500 per unit and have been paid. For a closing on June
6, the prorated amount for both rents is
A. 500 credit seller, debit buyer
B. 2,500 debit seller, credit buyer
C. 2,500 credit seller, debit buyer
D. 500 debit seller, credit buyer - ANSWER B. 2,500 debit seller, credit
buyer
The seller always owes the buyer rent. The rent was collected by the seller for
the month, and the buyer is due a prorated portion (debit seller, credit buyer).
Line 33: rent
8. A property has two special assessments - one for 263 that the seller has
agreed to pay and another for 72.46 that buyer has agreed to assume. How
should you handle the special assessments?
, A. 263 debit seller, credit broker
B. 263 debit seller, credit buyer
C. 263 debit seller, 72.46 debit buyer
D. 72.46 debit buyer, credit broker - ANSWER A. 263 debit seller,
credit broker
The seller will be debited for the one they agreed to pay. The buyer's side, 72.46
will be paid outside and after closing (debit seller, credit broker to pay the bill).
9. Who pays to record the deed of trust?
A. the seller
B. the broker
C. the buyer
D. Check section 4 of the contract - ANSWER C. the buyer
The deed of trust is a requirement of the lender and a cost of the loan (debit
buyer) for recording this document. The broker would be credited to pay the
bill.
10.If the sales price is $300,000, then the documentary fee will be
A. $3
B. unnecessary
C. $300
D. $30 - ANSWER D. $30
The documentary fee is .01 per 100. (Move the decimal four places to the left).
This would be a debit to the buyer and a credit to the broker to pay the bill.
Complete Actual Exam Study Questions with
100% Correct Answers Already Graded A+
1. A water bill of 31.85 was paid in advance for the months of July through
September. What is the entry for the proration when closing is on September
20?
A. 28 debit seller, credit buyer
B. 3.81 credit seller, debit buyer
C. 3.81 debit seller, credit buyer
D. 28 credit seller, debit buyer - ANSWER B. 3.81 credit seller, debit
buyer
Water paid in advance will be a buyer-owes-seller entry for the buyer's portion
of the month. The buyer has only 11 days out of 91 (small side) (credit seller,
debit buyer)
2. Who will always be charged for unpaid taxes for the preceding year?
A. the seller
B. There is no entry; this will be paid from the tax reserve
C. the buyer
D. the broker - ANSWER A. the seller
Unpaid taxes for the previous year may be a lien against the property and will
always be the obligation of the seller who lived there (debit seller, credit broker
to pay the bill).
,3. The owner's title insurance premium will normally be entered on the six-
column worksheet as
A. debit buyer, credit seller
B. debit seller, credit buyer
C. debit seller, credit broker
D. debit buyer, credit broker - ANSWER C. debit seller, credit broker
The residential contract to buy and sell states that the seller must provide title
insurance (debit seller, credit broker to pay the bill).
4. What is the entry for a loan being assumed?
A. debit seller, debit buyer
B. credit seller, debit buyer
C. debit seller, credit buyer
D. credit seller, credit buyer - ANSWER C. debit seller, credit buyer
The answer is debit seller, credit buyer. An assumed loan is a debit to the seller,
who will not receive this money, and a credit to the buyer, who does not need to
bring this amount to closing.
5. Who always pays to start a lender reserve?
A. the lender
B. the seller
C. the buyer
D. negotiable - ANSWER C. the buyer
,The answer is the buyer. The buyer is responsible for setting up any reserve
accounts (debit buyer).
6. The broker credit total column is a combination of
A. debits for bills paid and the amount of the check due to the seller
B. credits for bills paid and the amount of the check due to the seller
C. credits for bills paid and the amount of the check from the buyer
D. debits for bills due and the amount owed by the buyer - ANSWER B.
credits for bills paid and the amount of the check due to the seller
The broker credit (check paid) column represents credits for bills the broker
will pay and the amount of the check for the seller
7. A duplex's rents are 1,500 per unit and have been paid. For a closing on June
6, the prorated amount for both rents is
A. 500 credit seller, debit buyer
B. 2,500 debit seller, credit buyer
C. 2,500 credit seller, debit buyer
D. 500 debit seller, credit buyer - ANSWER B. 2,500 debit seller, credit
buyer
The seller always owes the buyer rent. The rent was collected by the seller for
the month, and the buyer is due a prorated portion (debit seller, credit buyer).
Line 33: rent
8. A property has two special assessments - one for 263 that the seller has
agreed to pay and another for 72.46 that buyer has agreed to assume. How
should you handle the special assessments?
, A. 263 debit seller, credit broker
B. 263 debit seller, credit buyer
C. 263 debit seller, 72.46 debit buyer
D. 72.46 debit buyer, credit broker - ANSWER A. 263 debit seller,
credit broker
The seller will be debited for the one they agreed to pay. The buyer's side, 72.46
will be paid outside and after closing (debit seller, credit broker to pay the bill).
9. Who pays to record the deed of trust?
A. the seller
B. the broker
C. the buyer
D. Check section 4 of the contract - ANSWER C. the buyer
The deed of trust is a requirement of the lender and a cost of the loan (debit
buyer) for recording this document. The broker would be credited to pay the
bill.
10.If the sales price is $300,000, then the documentary fee will be
A. $3
B. unnecessary
C. $300
D. $30 - ANSWER D. $30
The documentary fee is .01 per 100. (Move the decimal four places to the left).
This would be a debit to the buyer and a credit to the broker to pay the bill.
