Final answer:
The money received by Company S from Company P before services are provided should be reported as 'Unearned Revenue' or 'Deferred Revenue', which represents a liability until the services are provided.
Step-by-step explanation:
When Company S receives money in advance of providing services to Company P, the increase in the Cash account is balanced by a corresponding increase in a liability account. Specifically, the unearned amount should be reported as Unearned Revenue or Deferred Revenue on the company's balance sheet.
The T-account model teaches us that a firm's assets are separated from its liabilities and net worth. As Company S has not yet earned the money, it cannot recognize it as revenue; instead, it is a liability indicating the company's obligation to provide services in the future.
Once the service is performed, the amount will be transferred from Unearned Revenue to Revenue on the income statement, reflecting the earning of that money.