Question

What is the difference between selling on account versus cash?

Answer 1

The only difference between cash and credit transactions is the timing of the payment. A cash transaction is a transaction where payment is settled immediately. On the other hand, payment for a credit transaction is settled at a later date.
Try not to think about cash and credit transactions in terms of how they were paid, but rather, when they were paid.

For example, if someone buys groceries from our local shop and pay us in cash there and then, that’s a cash transaction. However, if we receive payment by card rather than cash ,That can also be classified as a cash transaction because we received payment immediately.
On the other hand, credit transactions are paid at a later date than when the exchange of goods or services took place and almost all of time an invoice for the transaction is issued. The time period before payment can vary depending on the types of businesses or even the industry in which the transaction is taking place. Once again, when payment is finally settled for the invoice, it may be done with cash or card, or any other payment method but it is still a credit transaction.
Businesses will have a mixture of cash and credit transactions make up their accounting records. Some businesses may have the majority of their transactions be either one or the other and some will have a more even split.