Unearned revenue is a type of liability that occurs when a company receives payment for goods or services that have not yet been delivered or provided. In accounting terms, it is considered a liability because the company has an obligation to fulfill the terms of the contract and deliver the promised goods or services. Unearned revenue is also sometimes referred to as deferred revenue or advance payment. The recognition of unearned revenue is important for a company's financial statements, as it helps provide an accurate picture of the company's financial health and future obligations. In general, unearned revenue is recorded as a liability on the balance sheet until the goods or services are delivered, at which point it is recognized as revenue on the income statement.