Questions: Liensee Caham deposits a buyer's earnest money check into his firm's general fund so that he can pay the rent on the brokerage office. This is an example of

Liensee Caham deposits a buyer's earnest money check into his firm's general fund so that he can pay the rent on the brokerage office. This is an example of

Transcript text: Liensee Caham deposits a buyer's earnest money check into his firm's general fund so that he can pay the rent on the brokerage office. This is an example of

Solution

Answer

The answer is commingling.

Explanation

Option 1: Capitalization

Capitalization refers to the process of recording a cost or expense on the balance sheet for the purposes of delaying full recognition of the expense. This is not relevant to the scenario described.

Option 2: Commingling

Commingling is the act of mixing funds that should be kept separate. In real estate, it is illegal for a broker to mix a client's funds, such as earnest money, with the broker's personal or business funds. The scenario described is a clear example of commingling, as Liensee Caham deposits the buyer's earnest money check into his firm's general fund to pay for office expenses.

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