1. A company makes a deferral adjustment that decreased a liability. This must

mean that a(n):

A expense account was decreased by the same amount.

B expense account was increased by the same amount.

C revenue account was increased by the same amount.

D revenue account was decreased by the same amount.

2. When a deferral adjustment is made to an asset account, that asset becomes

a(n):

A liability.

B other asset.

C revenue

D expense.

3. At the end of the year, accrual adjustments could include a:

A debit to an expense and a credit to an asset.

B credit to a revenue and a debit to an expense.

C debit to cash and a credit to Common Stock.

D debit to an expense and a credit to a liability.

4. One major difference between deferral and accrual adjustments is that

A accrual adjustments affect income statement accounts and deferral adjustments affect balance

sheet accounts.

B deferral adjustments increase net income and accrual adjustments decrease net income.

C deferral adjustments are made under the cash basis of accounting and accrual adjustments are

made under the accrual basis of accounting.

D accounts affected by an accrual adjustment always go in the same direction (i.e., both accounts are

increased or both accounts are decreased) and accounts affected by a deferral adjustment always

go in opposite directions (one account is increased and one account is decreased).