Which statement describes a credit sale?

Which statement describes a credit sale?

• A. A sale settled immediately by cash.
• B. A sale with no payment terms.
• C. A sale that provides a period before payment with higher cash-flow risk.
• D. A sale that uses only debit cards.

Answer: (C)

Credit sale means you sell goods or services and allow the customer to pay later, creating a receivable. You recognize revenue now, but cash comes in later, so cash flow is delayed and there’s a higher risk of non-payment. The statement that describes a sale with a period before payment and higher cash-flow risk fits this concept. The other statements describe immediate cash from a cash sale, or a payment term that isn’t clearly credit, or a payment method that doesn’t involve extending credit.

Credit sale means you sell goods or services and allow the customer to pay later, creating a receivable. You recognize revenue now, but cash comes in later, so cash flow is delayed and there’s a higher risk of non-payment. The statement that describes a sale with a period before payment and higher cash-flow risk fits this concept. The other statements describe immediate cash from a cash sale, or a payment term that isn’t clearly credit, or a payment method that doesn’t involve extending credit.