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Move from lesson study to exam practice in Accounting.
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Imagine Thandi running her spaza shop in Soweto. Every time she sells airtime or bread, she gives customers a cash slip. When she buys stock from a wholesaler in Polokwane, she receives an invoice. These pieces of paper are not just for show—they are source documents, the first proof that a transaction happened. Without them, Thandi could forget what she sold or bought, and her financial records would be a mess. In accounting, source documents like cash slips, receipts, invoices, and EFT confirmations are the foundation for all entries in the books. They provide evidence, help prevent fraud, and ensure accuracy. If SARS audits Thandi, she must show these documents to prove her business is honest. The rule: No source document, no entry in the books. This is true whether you’re running a minibus taxi business in Durban or a big supermarket in Mthatha.
Sipho works at a car wash in Khayelitsha. When a customer pays cash, he issues a cash receipt. When a company pays by EFT for a fleet wash, he prints the EFT proof. Each type of transaction has its matching document. The most common source documents in South Africa are: cash slips (for cash sales), receipts (proof of payment received), invoices (request for payment, usually for credit sales), credit notes (when goods are returned), and bank deposit slips (when money is deposited). For example, Ahmed buys soccer boots at a sports shop in Durban and gets a till slip. If he returns them, he receives a credit note. The document’s name tells you the transaction type. A common misconception is that all receipts are the same, but a cash slip is proof of sale, while a receipt is proof of payment received. Knowing the difference is crucial for accurate accounting.
Lerato runs a tuckshop at her school in Polokwane. When she sells chips, she gives the customer the original cash slip and keeps the duplicate for her records. This is standard practice: the original goes to the customer, the duplicate stays with the business. For invoices, the seller keeps the duplicate, and the buyer gets the original. This system helps both parties track their transactions. In South African businesses, keeping the correct copy is vital for audits and resolving disputes. A frequent error is mixing up which party keeps which copy—this can lead to missing records or confusion during SARS audits. Always check: original for the customer, duplicate for the business (except for invoices, where it’s reversed).
Step 1: Thandi sells airtime for R50 cash and issues a cash slip. Reason: Cash slips are used for cash sales. Step 2: She buys bread stock on credit from a wholesaler and receives an invoice. Reason: Invoices are used for credit purchases. Step 3: A customer returns expired chips, and Thandi issues a credit note. Reason: Credit notes are for returns. Step 4: Thandi deposits R1,000 into her business account and receives a bank deposit slip. Reason: Bank deposit slips are proof of money deposited. Final answer: Cash slip (cash sale), invoice (credit purchase), credit note (return), bank deposit slip (deposit). Sanity check: Each document matches a real transaction.
Step 1: Sipho receives R700 by EFT for a fleet wash and prints the EFT proof. Reason: EFT proof is evidence of electronic payment. Step 2: He records the transaction in the cash receipts journal (CRJ). Reason: All cash and EFT receipts go in the CRJ. Step 3: He enters the date, amount (R700), and details (fleet wash for Zama Logistics). Reason: Accurate details ensure clear records. Final answer: The R700 EFT is recorded in the CRJ with correct details. Sanity check: The transaction is traceable from the source document to the journal.
Question: Ahmed buys a Springboks jersey on credit from a sports shop in Durban. What source document does he receive? Let’s think: The shop sells on credit, so it’s not a cash slip. The shop issues an invoice for credit sales. Worked response: Ahmed receives an invoice. This is because invoices are always used when goods are sold on credit, not for cash purchases. Now you try: Lerato returns a faulty calculator to a stationery shop in Polokwane. What document does she get? Think about what is given when goods are returned. Answer: Credit note. The credit note proves that the goods were returned and the account is credited.
Question: Thandi receives R300 cash for selling cold drinks and issues a cash slip. Which journal does she use? Model thinking: Cash received goes in the cash receipts journal (CRJ). This is because all money coming into the business, whether by cash or EFT, is recorded in the CRJ. Worked response: Thandi records the R300 in the CRJ, making sure to include the date and details. Your turn: Sipho buys soap for R80 cash and gets a cash slip. Which journal? Think about whether money is coming in or going out. Answer: Cash payments journal (CPJ). The CPJ records all cash paid out by the business.
1. List three types of source documents you might see at a minibus taxi rank in Mthatha, such as cash slips, receipts, or bank deposit slips. 2. State who keeps the duplicate of a cash slip and explain why it is important for the business. 3. Name the journal used for recording cash received and give an example of a transaction that would be recorded there.
1. Classify each: a) EFT proof for payment received, b) Invoice for goods bought on credit, c) Credit note for goods returned. For each, state which journal it would be recorded in. 2. Explain why it is important to keep the duplicate of a cash slip, especially during an audit. 3. Identify the error: Thandi records an invoice in the CRJ. What should she have done instead, and why?
1. Analyse a scenario: Sipho receives R1,200 by EFT for services, issues a receipt, and records it in the CPJ. Identify and correct the mistake, explaining your reasoning. 2. Justify why original documents are needed during a SARS audit and what could happen if they are missing. 3. Predict what could happen if a business loses its source documents, considering both legal and practical consequences.
Answer: Invoice
An invoice is issued for credit sales. A cash slip is for cash sales, a receipt is proof of payment, and a credit note is for returns.
Answer: The business
The business keeps the duplicate for its records; the customer gets the original. Learners often confuse this.
Answer: Cash receipts journal
All cash and EFT receipts are recorded in the cash receipts journal (CRJ). EFT is treated as cash received because it increases the business’s bank balance. The CPJ is for payments, not receipts. Purchases and sales journals are for credit transactions only.
Answer: Goods are returned
A credit note is for returns. Learners often think it's for payment, but that's a receipt.
Answer: Bank deposit slip
A bank deposit slip is proof of money deposited. An invoice is for credit sales, not deposits.
Answer: They provide evidence of transactions, prevent fraud, and ensure records are accurate and reliable.
Source documents are the original proof that a transaction took place. Without them, it is easy to make mistakes or even commit fraud, as there is no way to check if the records are true. This is why auditors and SARS require businesses to keep these documents for several years.
Every transaction starts with a source document and ends up in the accounting books. For example, when Sipho receives R500 cash for a car wash and issues a receipt, he uses that receipt to record the transaction in the cash receipts journal (CRJ). If he buys cleaning supplies and gets an invoice, he records it in the purchases journal. The information on the document—date, amount, details—must be copied accurately. If you make a mistake, like recording the wrong amount, your books won’t balance. In the NSC exam, you may be given a set of source documents and asked to record them in the correct journal. Always double-check the document type and details before recording.
Answer: Purchases journal
Invoices for credit purchases are recorded in the purchases journal, not the cash journals. This is because the purchases journal is specifically for goods bought on credit, while the CRJ and CPJ are for cash transactions only. Recording it in the wrong journal would misstate the business's cash flow.
Answer: Record R500 in the CRJ with the date and details of the transaction.
The CRJ records all cash received, with details for traceability. The entry should include the date, the amount (R500), and a brief description such as 'cash sale – cold drinks.' This ensures the transaction can be traced back to the source document if needed.
Answer: Credit note
A credit note is issued for returns. Learners may confuse this with a receipt, but that is for payment.
Answer: To prove transactions occurred
Original documents are legal proof; without them, the business cannot justify its records. SARS uses these documents to verify that all transactions recorded in the books actually happened and that the amounts are correct. If originals are missing, the business may face penalties or fines.
Answer: Invoice should be in the purchases journal
Invoices for credit purchases go in the purchases journal, not the CRJ. The CRJ is only for cash or EFT receipts. Recording an invoice in the CRJ would incorrectly increase the business’s cash receipts, which is not accurate for credit transactions.