How are expenses on a closing statement categorized?

In a closing statement, expenses are categorized primarily as debits to the party responsible for paying them. This categorization reflects the financial responsibilities involved in a real estate transaction. When an expense is listed as a debit, it indicates an amount that the party must pay at closing. This is crucial for understanding how costs are allocated between the buyer and the seller.

Recognizing that expenses are debits helps to clarify the overall balance due at closing. Buyers typically incur expenses like loan origination fees, title insurance, and other fees necessary to complete the transaction, all of which are presented as debits on their side of the closing statement. Conversely, any credits, such as seller concessions or deposits, would offset those debits.

In contrast to the idea of expenses being always double entries, as mentioned in one of the other options, expenses are only recorded as a single debit for the responsible party under normal circumstances, simplifying the understanding of financial obligations. It is also inaccurate to categorize them as always credits, as this would imply that the expenses provide a benefit rather than a liability.