Which of the following describes a prorated expense?

A prorated expense refers to an allocation of costs that is divided between parties involved in a transaction, typically the buyer and the seller, based on the time each party benefits from the expense. In real estate transactions, certain expenses like property taxes, homeowners' association fees, or other charges can be adjusted at closing to reflect the period of ownership for each party. For instance, if a seller has already paid property taxes for the year and the buyer will own the property for several months of that year, a prorated amount of those taxes may be credited to the buyer at closing.

This process ensures that the financial responsibilities are fairly shared during the transition of ownership, allowing both parties to only pay for the portion of the expenses that corresponds to the time they owned or will own the property.