Which statement describes a credit sale?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

Which statement describes a credit sale?

Explanation:
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.

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