Jake Lewis received $800 in advance for tutoring fees when he agreed to help Laura Dalton with her introductory accounting course. Upon receiving the cash, Jake mentioned that he would have to record the transaction as a liability within his year-end financial statements. Laura asked, “Why a liability? You don’t owe me any money, do you?”

Required
Respond to Laura’s question regarding Jake’s liability. Exercise 3-7B Unearned items on financial statements