Which two types of prorations are commonly recognized?

The recognized types of prorations in real estate transactions are indeed accrued and prepaid. Accrued prorations refer to expenses that have been incurred but not yet paid, meaning that the selling party owes the buyer for these costs at the time of the sale. Examples include property taxes that are assessed but not yet due.

On the other hand, prepaid prorations represent expenses that have been paid in advance by the seller, which the buyer will benefit from after the closing. For instance, homeowners may prepay their property insurance or taxes, so the buyer has to consider that these amounts should be reimbursed.

Understanding these two types of prorations is essential for calculating the adjustment amounts during a real estate transaction, as they help in fairly distributing expenses between the seller and the buyer based on the property's closing date. The other options do not align with how prorations are classified in real estate; for example, monthly and annual could describe time frames but do not specifically categorize expenses as prorations.