# What Is Proration?

Proration is an accounting term that refers to the allocation of a financial asset or liability over time according to its schedule of payments. For example, if a company pays its employees on the first of every month, but one employee quits on the 15th of the month, the company would prorate that employee's salary for the time worked. Which of the following is an item that is not usually prorated? The answer is "dividends." Dividends are not usually prorated, because they represent a distribution of a company's earnings that is typically declared by the company's board of directors on a quarterly basis.

##### What is a proration dividend?

A proration dividend is a dividend that is paid on a pro rata basis. This means that the dividend is paid in proportion to the number of shares that the shareholder owns. For example, if a company declares a \$1 per share dividend and a shareholder owns 100 shares, the shareholder would receive a \$100 dividend.

How do you calculate proration? Proration is the process of allocating something, typically a costs or payments, over a period of time. The most common use of proration is in relation to rent, where a tenant who moves out mid-month is only responsible for a portion of the month's rent.

To calculate proration, you first need to determine the total amount that is being allocated. This can be done by multiplying the unit cost by the number of units. For example, if rent is \$1,000 per month and you move out on the 15th day of the month, the total amount of rent for the month is \$1,000.

Next, you need to determine the number of days that the amount is being allocated over. In the example above, this would be 15 days.

Finally, you need to divide the total amount by the number of days to get the prorated amount. In the example above, this would be \$1,000/15, or \$66.67. This is the amount of rent that the tenant would be responsible for. What is prorating Name 3 items that are likely to be prorated? 1. Rent
2. Insurance
3. Taxes How do you use prorated? Prorated means to divide something up according to a certain time period. In investing, this refers to dividing up the interest on a bond. For example, if you buy a bond on the first day of the year, you will receive the full interest payment for that year. But if you buy the bond on the last day of the year, you will only receive a prorated portion of the interest payment, based on the number of days left in the year.