What is the exam-ready answer?
| Official syllabus topic | Finance and Closing: Closing Procedures |
|---|---|
| Official PSI group | Finance and Closing |
| Published group count | 15 of the 52 Georgia questions |
| Exam portion | Georgia salesperson supplement |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes 16, 21, and 15 items for the three Georgia groups. It does not publish a guaranteed subtopic count. The statute, current GREC rule, contract, or other cited primary authority controls each lesson.
The lesson
Georgia questions reward the Georgia rule. A national rule that sounds right can still be the wrong answer when the question names a Georgia statute, document, role or procedure.
Debits and credits
A buyer debit increases buyer funds due; a buyer credit reduces them. A seller debit reduces proceeds; a seller credit increases them.
Major buyer entries
Purchase price and buyer-paid costs are debits, while loan proceeds, deposit, seller credit, and qualifying adjustments are credits.
Major seller entries
Sale price is a seller credit. Payoffs, seller-paid costs, commissions, taxes, and agreed credits commonly debit seller proceeds.
Proration
Determine the annual or periodic amount, daily or monthly convention, responsible days, and whether the item was prepaid or remains unpaid.
Decision rule
Georgia rule and national contrast
Worked Georgia example
Scenario. The seller prepaid a full year of property tax, and the buyer will own the property for the remainder of that year after closing.
Reason it through. The buyer reimburses the seller for the buyer's ownership period. That is a buyer debit and seller credit for the prorated amount.
Answer. Debit the buyer and credit the seller for the buyer's share of the prepaid tax.
Common exam traps
- Using debit as always bad for both parties
- Ignoring prepaid versus unpaid
- Counting from the wrong date
- Confusing deposit with an extra charge
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or a live examination. Choose an answer before opening the explanation.
Question 1The seller paid the full year's property tax of $3,650. Using a 365-day year, the buyer will own the property for 146 days of that tax year. Which entry is correct?
- A. Credit the buyer $1,460 and debit the seller $1,460
- B. Debit the buyer $2,190 and credit the seller $2,190
- C. Debit the buyer $1,460 and credit the seller $1,460
- D. Credit the buyer $2,190 and debit the seller $2,190
Show answer and explanation →
Answer: C. Debit the buyer $1,460 and credit the seller $1,460
The daily rate is $3,650 ÷ 365 = $10, so the buyer's 146 days come to $1,460. Because the seller already paid the whole year, the buyer reimburses that share as a buyer debit and a seller credit. Reversing the entries treats a prepaid tax as if it were still unpaid.
Question 2The buyer deposited $5,000 in earnest money when the contract was signed. How does it appear on the buyer's side at closing?
- A. As a debit, because it is money the buyer paid
- B. As a credit, because it reduces the cash still owed
- C. As a debit, because it is added to the purchase price
- D. It does not appear, because it was paid before closing
Show answer and explanation →
Answer: B. As a credit, because it reduces the cash still owed
A buyer credit reduces the funds the buyer must bring to closing, and money already deposited toward the price does exactly that. The deposit is not an extra charge on top of the price. The debit answers come from treating any payment as a debit instead of asking whether it adds to or reduces what the buyer owes.
Question 3This year's county property taxes are unpaid at closing, and the buyer will pay the full bill when it comes due. How is the seller's share handled?
- A. Debit the seller and credit the buyer for the seller's days
- B. Debit the buyer and credit the seller for the seller's days
- C. Debit the seller and credit the buyer for the full year
- D. No entry, because the buyer will pay the whole bill later
Show answer and explanation →
Answer: A. Debit the seller and credit the buyer for the seller's days
For an unpaid item, the buyer will pay the whole bill later, so the seller must hand over the share for the days the seller owned the property. That is a seller debit and a buyer credit. The reversed answer treats an unpaid tax like a prepaid one, which is why the first question is always whether the item has been paid.
Ready to move on?
You are ready for the next lesson when all of these are true.
- Explain Closing Statements, Debits, Credits, Prorations, and Funds in one clear answer without notes.
- Separate Debits and credits from Major buyer entries using a fresh example.
- Apply the decision rule to a new fact pattern and name the fact that controls the result.
- State the Georgia-specific point or explain why the national rule applies unchanged.
- Answer every practice question and explain the rule each rejected option misapplies.
- Revisit this topic later in mixed practice without category labels.
Recommended next lesson
Continue with Georgia Transfer Tax and Intangible Recording Tax. Two of the charges on a Georgia settlement statement are state taxes with different bases, and the next article shows how transfer tax is figured on the sale consideration while intangible recording tax is figured on the long-term note.
Return to the Finance and Closing hub for the complete official branch and the full lesson list for this Georgia group.