Explain the differences between accruals and deferrals. What ...

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Explain the differences between accruals and deferrals.
 
  What will be an ideal response?

Question 2

PCAOB Auditing Standard No. 5 uses ___________________ ___________ in its description of the conduct of an integrated audit under SOX 404.
 Fill in the blank(s) with correct word

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Answer to Question 1

An accrual is a transaction in which the revenue is earned, or the expense is incurred, before the exchange of cash. An example would be a sale on account. The account receivable is an accrual. A deferral is a transaction in which the exchange of cash takes place before the revenue is earned, or the expense is incurred. An example would be prepaid rent.

Answer to Question 2

COSO