Which description best fits a credit sale?

Which description best fits a credit sale?

• A. Customer pays at time of sale
• B. Customer is invoiced and pays later
• C. Payment is received before service
• D. Sale is a return

Answer: (B)

A credit sale means the seller allows the buyer to pay after receiving the goods or services. The defining feature is extending credit and invoicing the customer, which creates an accounts receivable and expects payment later according to terms. Because cash isn’t collected immediately, this isn’t a cash sale. The other descriptions describe different payment timings or outcomes: paying at the time of sale is a cash sale, paying before service is a prepayment, and a sale being a return refers to a reversal of a prior sale, not the method of payment.

A credit sale means the seller allows the buyer to pay after receiving the goods or services. The defining feature is extending credit and invoicing the customer, which creates an accounts receivable and expects payment later according to terms. Because cash isn’t collected immediately, this isn’t a cash sale.

The other descriptions describe different payment timings or outcomes: paying at the time of sale is a cash sale, paying before service is a prepayment, and a sale being a return refers to a reversal of a prior sale, not the method of payment.