A cash sale occurs when a customer pays for goods or services immediately upon delivery. No credit is extended by the seller. No account receivable is created. Resulting revenue is posted immediately to an income account, regardless of whether the business uses accrual or cash basis accounting. Therefore, no sales invoice is required. The entire transaction occurs in a single step.
Note
A cash sale does not need to involve receipt of physical cash. Money can be received via any form of exchange and deposited into either a cash or bank account. The distinguishing feature is that credit is not extended by the seller to the customer.
Cash sales are entered in exactly the same way as any other receipt. They should specifically list any inventory items sold. A copy of the receipt can be given to the customer as evidence of the sale.
When a cash sale is entered, any available credits the customer may have from credit notes or returns will not be applied. This is because such credits are recorded in customers’ subaccounts in Accounts receivable, which is not invoked for cash sales. To use such credits, a sales invoice must be used instead.
When a customer statement is created, cash sales for that customer will not be included. If a complete record of sales to a specific customer is desired, sales invoices must again be used.
When many cash sales are made, such as to walk-in customers in a retail shop, a single receipt summarizing the day’s sales can be entered into Manager. A cash register or point-of-sale system can be used to record individual sales, issue customer receipts, and manage cash in a till.