California Real Estate Practice Exam

Fuel oil left in the tank at the time of closing is best described as what?

1. Credit to the seller

2. Debit to the buyer

3. Debit to the seller

4. Credit to the buyer

The correct answer is: Credit to the seller

The correct answer is that fuel oil left in the tank at the time of closing is considered a credit to the seller. In real estate transactions, any personal property that remains with the property after the sale can often be assigned a value. The fuel oil in the tank is a tangible asset that the seller is leaving behind for the buyer, and thus, it is typically valued and credited back to the seller at closing. This means the seller does not receive payment for this fuel oil directly but is recognized in the closing statement as part of the selling terms. In this context, it's also important to understand that when calculating debits and credits during the closing process, any assets transferred to the buyer, in this case, the fuel, are accounted for in such a way that reflects a credit to the party who is relinquishing the property and an appropriate adjustment on the buyer's side or total transaction costs. This ensures that the seller receives equitable value for all assets included in the transaction when the closing statement is prepared.