Accounting - Term 1 - Week 8

Imagine Thandi runs a tuckshop in Khayelitsha. Every time she sells a Kota or airtime, she gives a cash slip. This slip is more than just a piece of paper—it’s proof a transaction happened. Source documents like cash slips, receipts, and invoices are the first link in the accounting chain. They provide evidence for every rand in or out. Without them, businesses can’t prove what they sold or bought. In South Africa, SARS (the tax authority) requires businesses to keep these documents for at least five years. Many learners think only big companies need source documents, but even a spaza shop or a minibus taxi owner in Polokwane must keep them. Always start your accounting process with the source document, not just what you remember.

Sipho, who runs a minibus taxi in Durban, uses different documents daily. When he buys petrol, he gets a cash slip. When he repairs his taxi, he receives an invoice from the mechanic. If he pays the mechanic immediately, he gets a receipt. Each document has a purpose: cash slips prove cash sales, receipts confirm payment, and invoices show what is owed. A common mistake is confusing an invoice (a request for payment) with a receipt (proof of payment). For example, if Sipho receives an invoice but hasn’t paid yet, he still owes money. Only after he pays and gets a receipt is the transaction complete. Remember: invoice means you owe, receipt means you’ve paid.

Lerato owns a small salon in Mthatha. When a customer pays for braids, Lerato gives her the original cash slip and keeps the duplicate for her records. Originals go to the customer; duplicates stay with the business. This is crucial for audits and for resolving disputes. Many learners think the business always keeps the original, but this is incorrect. The customer needs the original to prove payment, especially if there’s a problem later. Businesses keep duplicates to track income and expenses. In the NSC exam, you may be asked to identify who keeps which document—always remember: originals to customers, duplicates to the business.

Ahmed runs a hardware store in Soweto. He collects all his source documents at the end of each day. To record a sale, he checks the cash slips and enters the details into his cash receipts journal. For payments, he uses receipts and invoices to fill in the cash payments journal. The information from source documents must be recorded accurately—date, amount, and details. If Ahmed loses a document or records the wrong amount, his books will not balance. This can lead to problems with SARS or suppliers. Always double-check the details before recording. In exams, marks are often lost for incorrect dates or amounts, so be precise.

Step 1: Lerato receives R200 cash for a haircut and issues a cash slip to the customer. Reason: Every cash sale must be supported by a cash slip. Step 2: She buys shampoo from a supplier on credit and receives an invoice. Reason: Purchases on credit are documented with invoices. Step 3: She pays the supplier R150 in cash and receives a receipt. Reason: Receipts confirm payment has been made. Final answer: Cash slip for cash sale, invoice for credit purchase, receipt for payment. Sanity check: Each document matches the transaction type.

Step 1: Ahmed sells building materials for R500 cash. He issues a cash slip (No. 123) dated 12 March 2024. Reason: Cash slips are used for cash sales. Step 2: He records the transaction in the cash receipts journal: Date: 12 March 2024, Details: Building materials sale, Source Doc: Cash slip 123, Amount: R500. Reason: Journals must reflect all details from the source document. Final answer: The cash receipts journal shows a R500 sale on 12 March 2024, supported by cash slip 123. Sanity check: The journal entry matches the source document exactly.

Question: Sipho pays R300 cash to repair his minibus taxi. The mechanic gives him a document. Which document is it? Let’s think: Sipho pays cash, so he should get proof of payment. The mechanic gives him a receipt. Worked response: The correct document is a receipt. This is because a receipt is always issued after payment is made, confirming that the money has been received. Now you try: Sipho buys fuel for R200 cash. What document does he get? Think about what is usually given at petrol stations. Answer: Cash slip. A cash slip is issued for every cash purchase, such as buying fuel.

Question: Thandi sells snacks for R50 cash and issues cash slip 45 on 10 March 2024. How should she record this? Let’s model: She must enter the date, details, source document number, and amount in the cash receipts journal. Worked response: Date: 10 March 2024, Details: Snack sale, Source Doc: Cash slip 45, Amount: R50. This ensures her records match the physical document, which is important for both business tracking and SARS audits. Now you try: Thandi buys cooldrinks on credit and receives invoice 12. What should she record? Think about which journal is used for credit purchases. Answer: Record in purchases journal: Date, Details, Invoice 12, Amount. This keeps her credit purchases organised and traceable.

1. List three types of source documents used in South African businesses, such as cash slips, receipts, and invoices. 2. State who keeps the original cash slip in a sale and explain why. 3. Match each document to its correct use: Invoice (credit purchase), Receipt (proof of payment), Cash slip (cash sale).

1. Ahmed pays R400 cash for stock and receives a document. Name the document and explain its purpose. 2. Lerato sells hair products on credit and issues a document. Name it and say who keeps the original. 3. Record the following in the correct journal: Sipho receives R250 cash for a trip and issues cash slip 78. Include all necessary details.

1. Calculate the total cash sales for the day if Thandi issues cash slips for R50, R120, and R80. Show your working. 2. Explain why keeping duplicates is important for a business in case of a SARS audit, using a specific example. 3. Justify why an invoice alone is not proof of payment and describe what document is needed to confirm payment.

• Invoice
• Receipt
• Cash slip
• Order form

Answer: Cash slip

A cash slip is given for cash sales. An invoice is for credit sales, and an order form is not proof of payment. Many learners confuse receipts and cash slips, but receipts are usually for payments after an invoice, while cash slips are for immediate cash sales.

• The customer
• The business
• The supplier
• The bank

Answer: The business

The business keeps the duplicate for their records; the customer gets the original. This helps the business track all sales and provides proof if there’s an audit or dispute. Learners sometimes think the customer gets both, but only the original goes to the customer.

• Invoice
• Receipt
• Quotation
• Order form

Answer: Receipt

A receipt confirms payment. An invoice only shows what is owed, not that it has been paid. Many learners incorrectly believe an invoice means payment is complete, but only a receipt is proof.

• To provide evidence of a transaction
• To advertise products
• To calculate profit
• To pay employees

Answer: To provide evidence of a transaction

Source documents are proof that a transaction occurred, not for advertising or payroll. They are the first step in the accounting process and are required by law for record-keeping and audits. Learners often confuse their purpose with other business documents.

• He has paid for the goods
• He still owes money
• He has received a receipt
• The transaction is complete

Answer: He still owes money

An invoice means payment is due. Only a receipt confirms payment. Many learners think receiving an invoice means the transaction is finished, but it only shows what is owed, not that payment has been made.