Types of Sales

Cash Sale

When Rosie Rouse started the Spouse House Company, she put a ready-made Spouse House on a flatbed trailer, off-loaded it in the customer’s backyard, collected the money, and left. This was clearly a sale—she traded money for merchandise.

Credit Sale (Sale on Account)

In March, Rosie sold her 10th Spouse House to her Uncle Harry. He was a rather wealthy individual, and part of his wealth accumulation came about because he never parted with money until he absolutely had to. This had two results germane to our story: He needed the Spouse House because his stinginess kept him in trouble with his spouse, Aunt Matilda; and he did not pay Rosie for the Spouse House until June. Was the sale made in March, when the Spouse House was delivered, or in June, when Uncle Harry finally wrote the check? The accountants’ (and the lawyers’) rule is that the sale happened when Rosie delivered the Spouse House to Uncle Harry. In technical terms, the sale occurred when ownership of (title to) the property was transferred.