Business, Legal & Accounting Glossary
The term “cash sale” can be used by people in several different contexts. A cash sale has to deal with the purchase of goods or services, in just about every situation, and it involves the immediate possession of the new owner, without any amount of time between purchase and assuming full ownership. On a daily basis, people engage in cash sales, both in the world of finance and in retail situations.
The term also has its applications while dealing with investments. Within this context, a cash sale is referred to as a financial transaction that rather than taking place after the usual three-day period involved in most types of settlements is completed on the actual trade date. Due to the cash sale, the new owner is allowed to take immediate possession free and clear. Due to this arrangement, the investor is allowed to retain or sell the security immediately, without having to wait any amount of time.
In case if the sale takes place late in the business day, then also the transaction can still be considered to be a cash sale and it is treated as if the actual purchase day and the trade date are the same. Generally, as long as the transaction takes place before 2:30 p.m . Eastern Standard Time there will be no difference. However, in the case of a cash sale being conducted after that time then it will also be completed and recorded for the following business day, and it will still be able to avoid the necessity of the three-day settlement period.
If we talk about the purchases for the office or the home, then the cash sales are referred to as transactions that are immediately processed by the use of cash or a check. For the products that are purchased there is no situation of a deferred payment. Liquid assets are used to pay for the products in full, which makes the buyer able to take immediate possession. In this application, the cash sale could be the outright purchase of office equipment, a new television or computer for the home, or any other tangible item that is purchased for general use in the space.
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This glossary post was last updated: 13th November, 2021 | 0 Views.