Final answer:
The process of adjusting accounts for expenses used but not yet paid or recorded during the year is known as 'accrual.' This method records the expense when incurred, ensuring financial statements are accurate for the period.
Step-by-step explanation:
The question relates to the process of adjusting accounting records for expenses that have been incurred but not yet paid or recorded. When you adjust the accounts to reflect the amount of rent used during the year, this is typically referred to as an accrual. An accrual is an accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The expense is recorded when it is incurred, rather than when it is paid. This ensures that financial statements reflect all the expenses that relate to the current period. For instance, if a company pays for a full year of rent in advance, an accrual entry would be made each month to account for the rent expense of that month, reducing the prepaid asset and recognizing the expense in the income statement.