Which term describes an adjustment at the end of a billing period to align estimated payments with actual usage, resulting in either a credit or a balance owed?

• A. true-up adjustment
• B. annual review
• C. rate
• D. reconciliation

Answer: (A)

The term describes an adjustment at the end of a billing period to align estimated payments with actual usage, resulting in either a credit or a balance owed. This is called a true-up adjustment. It’s used when charges are based on estimates during the period, and once actual consumption is known, the bill is corrected to reflect the real usage. If you used more than estimated, you’ll owe more; if you used less, you’ll receive a credit toward future bills. In contrast, an annual review is just a general yearly check, rate refers to the price per unit of service, and reconciliation is a broader accounting process of matching records—none of these capture the specific end-of-period true-up of estimated versus actual usage as precisely as a true-up adjustment.