Accounting - Term 2 - Week 10

Imagine Thandi running a spaza shop in Khayelitsha. Every day, she receives cash slips from customers, tax invoices from suppliers, and EFT payment confirmations on her phone. These are all source documents—original records showing a transaction took place. For example, a cash slip from Boxer Superstores proves Thandi bought stock. The rule: every transaction must be supported by a source document. This helps businesses track money, prevent theft, and satisfy SARS (South African Revenue Service) during audits. Many learners think only big businesses need source documents, but even a small tuck shop in Polokwane must keep them. Without these records, it’s easy to forget sales, miscount cash, or lose track of who owes what. Source documents are the backbone of reliable accounting.

Sipho’s uncle owns a minibus taxi business in Soweto. When he fills up with petrol, he gets a cash slip. When he repairs his taxi, he receives a tax invoice. If a customer pays via EFT, he gets an SMS or bank proof. Each document has a purpose: cash slips for cash payments, tax invoices for credit sales or VAT claims, and EFT proofs for electronic payments. For example, a tax invoice from AutoZone in Durban will show the date, supplier, items bought, VAT, and total. A common mistake is mixing up receipts and invoices—remember, a receipt proves payment was made, while an invoice requests payment. Always check the details: date, amount, names, and VAT number. These details matter when recording transactions or facing an audit.

Lerato, a Grade 10 learner in Mthatha, helps her mother with the family’s catering business. She must record each transaction in the books using the correct source document. For example, when a customer pays R500 cash for a platter, Lerato issues a cash slip and records it in the Cash Receipts Journal (CRJ). If she buys ingredients on credit from Ahmed’s Supermarket, she uses the supplier’s tax invoice and records it in the Purchases Journal. A common misconception is that you can record transactions from memory or WhatsApp messages—never do this! Only use original source documents. This ensures accuracy and protects the business if there’s a dispute or SARS inspection. Always double-check amounts, dates, and whether VAT applies.

Load-shedding hits Durban and Ahmed’s bakery loses power. He worries about theft, so he checks his source documents daily. Source documents are key for internal control—they help spot missing cash, prevent fraud, and ensure every sale or purchase is recorded. Auditors use these documents to verify that the business’s records are truthful. For example, if the bank statement shows R2 000 deposited but there’s no matching cash slip, something is wrong. In the NSC exam, you may be asked to explain why source documents are important or to identify missing documents in a scenario. Remember: no document, no proof, no transaction!

Step 1: Read the document. Thandi buys cold drinks for R120 cash at Boxer in Polokwane and receives a cash slip. Step 2: Identify the type. It’s a cash slip, so it proves a cash payment. Step 3: Classify the transaction. This is a cash purchase of trading stock. Step 4: Record it. Enter in the Cash Payments Journal (CPJ) under Trading Stock. Final answer: The cash slip is proof of a cash purchase of trading stock, recorded in the CPJ. Sanity check: The payment was cash, so it cannot go in the Purchases Journal (which is for credit).

Step 1: Read the tax invoice. Sipho’s uncle buys brake pads for R500 on credit from AutoZone in Durban. Step 2: Identify the type. It’s a tax invoice, which is used for credit purchases and VAT claims. Step 3: Check the details. The invoice shows the supplier, date, items, VAT, and total. Step 4: Record it. Enter in the Purchases Journal (PJ) under Trading Stock. Final answer: The tax invoice is proof of a credit purchase of trading stock, recorded in the PJ. Sanity check: No cash was paid, so it cannot go in the CPJ.

Question: Lerato receives an EFT proof showing R1 000 paid by a customer for catering services. Which journal should she use? Let’s think: EFT is an electronic payment, so it’s like receiving cash. She needs to record it in the Cash Receipts Journal (CRJ) under Services Rendered. Worked response: The EFT proof is used to record a cash receipt in the CRJ. This is because EFTs are treated as cash receipts in accounting. Now you try: Ahmed receives a cash slip for R300 paid for flour. Which journal? Think about whether the business is receiving or paying out money. Answer: Cash Payments Journal (CPJ), because it is a payment made by the business for stock.

Question: Sipho finds a tax invoice with no VAT number. Is this a valid tax invoice? Let’s think: For VAT claims, a valid tax invoice must show the supplier’s VAT number. If missing, SARS may reject the claim. Worked response: The invoice is not valid for VAT purposes and cannot be used to claim VAT. This could cause problems during an audit or if the business wants a VAT refund. Now you try: Thandi receives a cash slip with no date. What’s the problem? Consider why the date is important for recordkeeping and audits. Answer: The slip is incomplete and may not be accepted as proof because the date is missing, making it hard to match to the correct transaction.

1. List three types of source documents used in South African businesses, such as cash slips, tax invoices, and EFT proofs. 2. State which journal records cash received from customers and explain why this is the correct journal. 3. Name one detail every tax invoice must have, and give a reason why it is important for the business.

1. Classify each: EFT proof for R2 000 received, cash slip for R150 paid, tax invoice for R800 on credit. For each, state the correct journal. 2. Explain why it’s risky to record transactions without source documents, using an example from a real business. 3. Identify the error: a tax invoice missing the supplier’s name, and describe how this could affect the business during an audit.

1. Analyse a scenario: Ahmed’s bakery has a bank deposit of R5 000 but only R4 000 in cash slips. What could explain the difference? Suggest at least two possible reasons. 2. Justify why auditors insist on original source documents, not copies, and explain what could go wrong if only copies are kept. 3. Prepare a table matching five transactions to the correct source document and journal, using realistic examples from South African businesses such as a spaza shop, taxi business, or catering company.

• Tax invoice
• Cash slip
• Bank statement
• Order form

Answer: Cash slip

A cash slip is issued for cash sales. Many confuse tax invoices with cash slips, but tax invoices are for credit sales or VAT claims.

• Supplier’s VAT number
• Customer’s ID number
• Bank account details
• Signature of cashier

Answer: Supplier’s VAT number

The VAT number is required by law for VAT claims. Learners often wrongly think a signature is essential.

• Cash Receipts Journal
• Purchases Journal
• Cash Payments Journal
• Sales Journal

Answer: Cash Payments Journal

EFT payments are cash outflows, so they go in the CPJ. Many mix up CPJ and Purchases Journal, but PJ is for credit purchases.

• To prove transactions occurred
• To help with audits
• To decorate the office
• To prevent fraud

Answer: To decorate the office

Source documents are for proof, audits, and control—not for decoration. This distractor checks if learners understand the purpose.

• Increased accuracy
• Possible errors or fraud
• Higher profits
• Faster audits

Answer: Possible errors or fraud

Recording from memory is risky. Learners may think it saves time, but it increases mistakes and fraud.

Answer: Date and amount

Date and amount are essential for proof. Learners sometimes forget the date, which is critical for audits.