The company uses up $5,000 of an existing asset and the company adjusts its accounts accordingly.This is an example of a(n):
A)accrual adjustment.
B)closing adjustment.
C)deferral adjustment.
D)unethical adjustment.

Question

Quizplus · Accepted Answer

When the company pays cash before incurring the expense,the prepayment is recorded in an asset account on the balance sheet.A deferral adjustment occurs when the asset is partially used up during the accounting period.The expense is incurred and recorded and the asset account is decreased.

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