Correct.
With decreasing temperature, the altimeter overreads. So as the temp drops, it shows 7,300 instead of 7,000 (although the difference wouldn't be that large).
So to show the correct altitude, you reduce the setting on the subscale.
This is true even if the actual pressure remains the same.
Do a search on Gay-Lussac's Law, Charles Law, Boyle's Law and the Universal Gas Law. Maybe that'll help you.