What is Credit Sales - Definition And Meaning

When goods are sold on credit basis or services are rendered to customers on account, then we can say that Sales are made on account. So, credit sales is the part of Total Sales which the sum of Cash Sales + Credit Sales.

Sales Day Book is prepared to record Credit Sales Transactions. The carried down value is transferred to Income Statement or Profit And Loss Account at the end of Accounting Period. We Credit it when it is accrued and Debit it when we close it.

Credit Sales Journal Entry

Example: Suppose Mr. A sold 3 Tables Rs. 30000 (Each Rs. 10000) to Mr. B on Credit, then following Journal Entry is recorded in Sales Day Book as shown below:

                                                              Mr. A      30000

                                                                           Sales a/c     30000

(Sold 3 Tables To Mr. B On Account)

So, Credit Sales are goods sold or services rendered to customers on account and it is a direct revenue for the business.