PRORATA Meaning and
Definition
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Prorata is an accounting and financial term that refers to the proportional distribution or allocation of a particular amount, value, or quantity based on a specific factor or criteria. The term is derived from the Latin phrase "pro rata parte" meaning "in proportion to the part." It is commonly used in business settings where the division or sharing of costs, revenues, benefits, or liabilities needs to be calculated based on a proportional basis.
In practice, prorata involves dividing a total amount or value into equal portions or ratios according to a specified ratio or proportion. This division is usually based on factors such as time, usage, quantity, or shares. The prorata calculation ensures that each party or stakeholder involved receives a fair and equitable portion relative to their individual share or entitlement.
For instance, in the case of shared expenses among roommates, prorata would determine how much each person should pay based on the size or square footage of their respective rooms. If two roommates have rooms of different sizes, the prorata calculation would allocate a higher portion of the total expenses to the roommate with a larger room.
Overall, prorata is a method used to distribute obligations, benefits, or costs fairly and proportionally among multiple parties or participants based on a predetermined criteria or factor. Its application can be found in various fields such as finance, accounting, insurance, real estate, and shared resource management.
Etymology of PRORATA
The word "pro rata" comes from Latin, specifically from the phrase "pro rata parte", which translates to "in proportionate part". "Pro" means "for" or "in favor of", and "rata" is the ablative form of "ratus", meaning "reckoned" or "considered". In English, "pro rata" is used as an adverb or adjective to describe something that is divided or distributed in proportion to a fixed rate or ratio. Over time, this Latin phrase has been abbreviated to "prorata" in English.
Similar spelling words for PRORATA
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