When the Buyer and the Seller Have Agreed on the Terms

question 42

Multiple Choice

When the buyer and the seller have agreed on the terms of the sale,the closing can be handled by

• A) An accountant
• B) The buyer and seller themselves
• C) Escrow settlement
• D) A nonpartial third party

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Definitions:

Accrual

The accounting practice that documents income and expenditures at the time they happen, irrespective of the timing of the actual cash flows.

Retained Earnings

The amount of net profit remaining for the company after distributing dividends to its stockholders.

Note Payable

A written promise to pay a specified amount of money, along with interest, by a certain date.

Interest Expense

The cost incurred by an entity for borrowed funds, recognized in the income statement.