Picasso Art School's operating activities for the month of February are summarized in the following transactions: 1.Provided $1,500 of instructional lessons.
2)Received $2,100 cash from students-of which $1,200 is for lessons provided in February,and $900 is for lessons provided in January.
3)Paid January's rental bill of $300.Received February's bill of $450 but did not pay.
Determine Picasso Art School's Net Income for February using the accrual basis of accounting?

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized when earned and expenses are recognized when incurred. Revenue for February is $1,500 (lessons provided) and expenses are $450 (February's rental bill). Net Income = $1,500 - $450 = $1,050.

Picasso Art School's Operating Activities for the Month of February