Unearned revenue is best described as:

Unearned revenue refers to cash received by a business for goods or services that have not yet been delivered or performed. This situation creates a liability for the company because it has an obligation to provide the goods or services in the future. Since the revenue has not yet been earned, it is recorded as a liability on the balance sheet until the service or product is delivered, at which point the company will recognize the revenue and convert the liability into earned revenue.

This definition aligns perfectly with the correct choice, as it emphasizes the essence of unearned revenue being a payment received in advance for goods or services that are pending delivery. Understanding this concept is crucial for accurately reflecting the financial position of a business and ensuring that revenues are recognized in the correct accounting period according to the revenue recognition principle.