The Sales menu lists transactions according to where they are in the order workflow. You might think of each of option as a different stage in the lifetime of an order.
When an order is placed, a sales order is created as a temporary record of the transaction. Payment has not been processed, and the order can still be canceled.
An invoice is a record of the receipt of payment for an order. Multiple invoices can be created for a single order, each with as many, or as few of the purchased products that you specify. Depending on the payment action, payment can be automatically captured when the invoice is generated.
A shipment is a record of the products in an order that have been shipped. As with invoices, multiple shipments can be associated with a single order, until all of the products in the order are shipped.
A credit memo is a document that shows the amount that is due the customer for a full or partial refund. The amount can be applied toward a purchase or refunded to the customer.
The Transactions page lists all payment activity that has taken place between your store and all payment systems, and provides access to more detailed information.