Which of the following describes a sale for which cash will be received at a later date?

• A. Sale on Account
• B. Cash Sale
• C. Credit Sale
• D. Deferred Sale

Answer: (A)

The term that best describes a sale for which cash will be received at a later date is a sale on account. In this context, a sale on account occurs when a business provides goods or services to a customer, allowing them to pay later, typically within an agreed timeframe. This transaction creates an accounts receivable for the business, indicating that the amount owed to them will be collected in the future.

In contrast, a cash sale involves immediate payment at the time of the transaction, meaning the business receives cash right away. A credit sale is often used interchangeably with a sale on account, but it can imply specific terms of repayment and interest; however, in this case, the question emphasizes that the cash will come later, focusing on the accounts aspect. A deferred sale generally suggests that there is a postponement of payment but may not distinctly address the credit aspect involved with accounts receivable.

Understanding these definitions helps clarify the implication of transactions and financial reporting within accounting principles.