Final answer:
In a situation where revenue is earned before receiving cash, it should be recorded as accrued revenue in the accounts, an application of the accrual basis of accounting.
Step-by-step explanation:
According to the framework for adjustments in accounting, if we earn revenue before receiving the cash, we record this transaction as an accrued revenue. This is based on the accrual basis of accounting where revenues are recognized when earned, not necessarily when the cash is received. To reflect this transaction, an adjusting entry is made where a debit is recorded to an asset account called Accounts Receivable, indicating the amount that customers owe, and a credit is recorded to a revenue account, which increases the company's revenues.