Final answer:
Unearned revenue represents payments received for goods or services that have not yet been delivered or performed, and is recorded as a liability on the balance sheet until the revenue is earned.
Step-by-step explanation:
Unearned revenue is a financial concept that represents a payment received by a company for goods or services that have yet to be delivered or performed. It is revenue that has been received but not yet earned, and therefore, it is recorded as a liability on a company's balance sheet until the service or product is delivered, and the revenue can be recognized. For example, if a company receives payment at the beginning of the year for a service that will be provided over the next 12 months, this payment is considered unearned revenue until the service is fulfilled each month.