Final answer:
Cash related to future revenue is recorded as a liability called unearned revenue on a company's balance sheet.
Step-by-step explanation:
If the cash received is related to future revenue, it is initially recorded as a liability called unearned revenue or deferred revenue. In accounting, when a company receives payment for products or services that it has yet to deliver or perform, the company records this as a liability because it has an obligation to provide the service or product in the future.
The T-account, which is a balance sheet with a two-column format representing Assets and Liabilities, would show an increase in liabilities when this kind of transaction takes place. Over time, as the service is rendered or the product is delivered, the liability is decreased, and the amount is recognized as revenue.
If the cash received is related to future revenue, it is initially recorded as a liability called unearned revenue. Unearned revenue represents the money received in advance for goods or services that are yet to be provided. This liability is recorded on the balance sheet as a liability because the company has an obligation to deliver the goods or services in the future.