1. When adding fractions with different letters in the denominator does there have to be a common denominator?
Yes, all of the same rules for number fractions apply to algebra fractions.
2. Can letters or variables be cancelled like numbers?
Yes, provided that the one of the terms being cancelled is in the numerator of the fraction(s), and the other term being cancelled is in the denominator. i.e. You cannot cancel two letters if both are in the numerators.
3. When dividing algebraic fractions and there are 3 fractions involved, which fractions get turned upside down?
The second and the third fractions get turned upside down and the signs are changed to multiplication.