New Jersey Real Estate License Exam Practice Question
Real estate taxes that are paid in advance are prorated on the closing statement as:
Correct Answer: C
Rationale: When real estate taxes are paid in advance, they benefit the buyer for the period they will occupy the property. Therefore, on the closing statement, these taxes are credited to the buyer, reflecting the seller's obligation to reimburse the buyer for the prepaid amount.
Option A is incorrect as it suggests no entry for the buyer, which overlooks the buyer's entitlement to a credit. Option B incorrectly identifies the seller's debit, failing to recognize that the seller has already paid those taxes. Option D misplaces the debit and credit roles, as it indicates the buyer owes the seller for taxes already covered.
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