The company uses up $5,000 of an existing asset.The company adjusts its accounts accordingly.Which of the following is a true statement?
A)This is an accrual adjustment.
B)This is a closing adjustment.
C)This is a deferral adjustment.
D)This is an unethical adjustment.

Question

Quizplus · Accepted Answer

This is a deferral adjustment because the company is adjusting their accounts to reflect the use of an existing asset, which means that the cost of the asset has already been incurred but not yet recognized as an expense on the financial statements.

The Company Uses Up $5,000 of an Existing Asset