Ch 22

Question 1

prorations

Answer 1

expenses divided between the seller and the buyer, including accrued items ( such as real estate taxes ) and prepaid items ( such as fuel oil in a tank )

Question 2

Accrued and prepaid items

Answer 2

Accrued items - buyer credit

Prepaid items - seller credit

Question 3

4 Considerations of prorating

Answer 3

1. Nature of item being prorated
2. Whether it is an accrued item requiring determination of earned amount
3. Whether it is a prepaid item that requires the unearned amount refunded
4. What arithmetic processes must be used