Explanation:

The term “credit sales” refers to a transfer of ownership of goods and services to a customer in which the amount owed will be paid at a later date. In other words, credit sales are those purchases made by the customers who do not render payment in full at the time of purchase.
Basically, there are three types of sales transactions- cash sales, credit sales, and advance payment sales. The variation between these sales transactions simply lies in the timing of when cash is received.

• Cash sales – Cash is collected when the sale is made, and the goods or services are delivered to the customer. Here the consideration for sale is settled in cash or cash equivalent by the buyer.
• Credit sales - Here, the consideration is for sale is settled on a later date. The seller provides the credit period to pay the bill on the later date.
• Sales against advance payments – Here, customer’s pay the seller in advance before the sale is made. Generally, the advance payment is a partial amount of full consideration and sometimes, it could be full consideration as well.