Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

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What is a debit in the context of closing costs?

A discount on the total cost
Money owed by one person to the other
An error in accounting
A bonus for early payment

The correct answer is: Money owed by one person to the other

A debit in the context of closing costs is not a discount, as a discount would be a reduction in the total cost, not an addition. It is also not an error in accounting, as a debit is a legitimate transaction that must be accounted for. A debit is also not a bonus for early payment, as this would be a credit instead. The correct answer, money owed by one person to the other, accurately describes a debit in the context of closing costs. In this situation, a debit would represent an amount owed by the buyer to the seller for items such as appraisal fees, title fees, or prepaid interest.