Unearned revenue is generally reported as a liability on a company's balance sheet. This is because the company has received money for goods or services that have not yet been provided.
For example, let's say a company sells annual subscriptions to its software. If it collects payment for these subscriptions up front, it will recognize unearned revenue on its balance sheet. Once the subscription period is up and the customer has access to the software, the unearned revenue will be transferred to revenue on the income statement.
