One major difference between deferral and accrual adjustments is that:

Multiple Choice

• accrual adjustments affect income statement accounts, and deferral adjustments affect balance sheet accounts.

• deferral adjustments increase net income, and accrual adjustments decrease net income.

• deferral adjustments are made under the cash basis of accounting, and accrual adjustments are made under the accrual basis of accounting.

• 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).