If cash is received before earning the revenue, it should be recorded as unearned revenue and shown as a liability on the balance sheet.
According to the framework for adjustments, if we receive cash before earning the revenue, we need to record it as unearned revenue. Unearned revenue is a liability on the balance sheet because the company has received the cash but has not yet provided the goods or services associated with the revenue. As the goods or services are delivered, the liability decreases, and revenue is recognized.