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Chapter 05 - Adjustments and the Worksheet
Chapter 05
Adjustments and the Worksheet
1. All changes in account balances are caused by transactions between the business and
another business or individual.
2. Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a
business until they are used.
3. The cost of a long-term asset, such as equipment, is transferred to expense as it is used
during its life.
5-5
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16. A(n) ____________________ is a comparison of the general ledger accounts with debit
balances to the general ledger accounts with credit balances to make sure that the debit and
17. The process of allocating the cost of a long-term asset as an expense of operations during
the asset's expected useful life is known as ____________________.
18. The difference between the debit balance of the Equipment account and the credit balance
of the Accumulated Depreciation—Equipment account is called the ____________________
