Accounting - Term 2 - Week 4

Imagine Thandi running her spaza shop in Soweto. Every time she sells airtime or bread, she issues a cash slip. These slips are not just for customers—they are proof of each transaction. In accounting, we call these proofs 'source documents.' They are the first and most important record of any business transaction. Without them, Thandi could forget sales, lose track of cash, or even face SARS penalties. A source document is any written evidence that a transaction took place, like receipts, invoices, or bank deposit slips. For example, when Sipho pays for a taxi ride with cash, he might get a receipt. That receipt is a source document for both him and the taxi owner. The main rule: every transaction must be supported by a source document. This keeps the business honest and helps accountants prepare accurate records.

Think about Ahmed, who owns a car wash in Durban. He uses several types of source documents daily: cash register slips for walk-in customers, EFT proof for online payments, and duplicate receipt books for monthly clients. The most common source documents are cash slips, invoices, receipts, cheque counterfoils, deposit slips, and bank statements. Each serves a different purpose. For example, a cash slip shows immediate payment, while an invoice requests payment later. A deposit slip proves money was put into the bank. A common misconception is that only big businesses need source documents. In reality, even a street vendor in Polokwane needs them to track income and expenses. Remember: the type of document used depends on the transaction and payment method.

When Lerato buys school shoes from a shop in Mthatha, she gets the original cash slip. The shop keeps the duplicate. The original is always given to the customer, while the business keeps the duplicate for its records. This is important for audits and for resolving disputes. For example, if there’s a problem with the shoes, Lerato can show her original slip. The shop can check its duplicate to confirm the sale. Many learners mix up who keeps which copy. Remember: original goes to the customer, duplicate stays with the business. This rule applies to receipts, invoices, and most other source documents. Keeping the right copy helps both sides prove what happened if there’s ever a disagreement.

Picture Sipho, who runs a minibus taxi in Johannesburg. At the end of each day, he gathers all his cash slips and receipts. He uses these to fill in his cash receipts journal (CRJ). The CRJ is a book where all money received is recorded, using information from source documents. If Sipho pays for petrol, he records it in the cash payments journal (CPJ) using the petrol slip. The process: collect source documents, check details, then record in the correct journal. This is the first step in the accounting cycle. A mistake here—like recording a sale in the wrong journal—can cause big problems later. Always check the date, amount, and details before recording. This habit will help you avoid errors in both school and real business.

Step 1: Thandi sells a loaf of bread for R15 cash and issues a cash slip (No. 123) to the customer. This is the original slip, and she keeps the duplicate for her records. Step 2: She checks that the details on the slip—date, amount, and item—are correct. Step 3: At the end of the day, she gathers all her duplicate slips and counts the cash in her till to make sure it matches the total on the slips. Step 4: She enters the transaction in her CRJ: Date: 10 May, Details: Bread sale, Doc No: 123, Amount: R15. Step 5: She files the duplicate slip in her records for future reference or audits. Final answer: The cash sale is correctly recorded in the CRJ as R15. Sanity check: The cash in the till equals the total of all cash slips for the day, so her records are accurate.

Step 1: Ahmed receives an EFT notification for R80 from a customer who paid online for a car wash. Step 2: He prints the EFT proof (such as a bank SMS or online notification) and attaches it to his daily records. Step 3: He checks the details on the EFT proof—date, amount, and payer—to ensure they match the service provided. Step 4: He enters the transaction in his CRJ: Date: 12 May, Details: Car wash (EFT), Doc No: EFT001, Amount: R80. Step 5: Later, he checks his bank statement to confirm that the R80 has been deposited. Step 6: He files the EFT proof with his other source documents. Final answer: The EFT payment is recorded in the CRJ as R80. Sanity check: The bank statement matches the EFT proof and the CRJ entry, confirming accuracy.

Question: Sipho buys petrol for his taxi and pays cash. What source document should he receive? Let's think: He paid cash, so the petrol station will give him a cash slip as proof of payment. Worked response: The correct source document is a cash slip, which he should keep for his records and to claim business expenses. Now you try: Lerato buys school books on credit from a shop. What source document will she receive? Think about whether she pays now or later. Answer: An invoice, since she will pay at a later date. This helps both her and the shop keep track of the credit sale.

Question: Ahmed pays R200 cash to fix his car wash machine. Which journal should he use? Let's reason: This is money going out of the business, so it is a payment. Payments are recorded in the Cash Payments Journal (CPJ). Worked response: Ahmed records the transaction in the CPJ, using the receipt from the repair service as the source document. Now you try: Thandi receives R50 cash for selling airtime. Which journal does she use? Think about whether money is coming in or going out. Answer: CRJ, because she is receiving money for a sale.

1. List three examples of source documents you might find in a South African business, such as a spaza shop or taxi service. 2. State who keeps the original and who keeps the duplicate of a receipt, and explain why. 3. Name the journal where cash received is recorded, and briefly describe its purpose.

1. Match each transaction to its source document: (a) Cash sale, (b) Credit purchase, (c) Bank deposit. 2. Explain why it is important for a business to keep duplicate receipts for all sales and payments. 3. Record the following in the correct journal: Sipho receives R100 cash for a taxi ride. Include the date, details, and amount.

1. Analyse the impact of losing source documents on a business during a SARS audit, considering possible consequences. 2. Justify why the correct journal must be used for each transaction, using an example. 3. Solve: Thandi receives R200 by EFT for groceries and pays R50 cash for cleaning. Record both transactions in the correct journals, including all relevant details.

• Duplicate receipt
• Original cash slip
• Bank statement
• Invoice

Answer: Original cash slip

The original cash slip is always given to the customer; the duplicate stays with the business. Many confuse this, but the customer needs proof of purchase for returns or disputes, while the business needs the duplicate for its records and audits.

• Cash Receipts Journal (CRJ)
• Cash Payments Journal (CPJ)
• General Journal
• Petty Cash Journal

Answer: Cash Receipts Journal (CRJ)

EFTs are money received, so they go in the CRJ. Some think only cash goes in the CRJ, but EFTs count too. The CRJ records all forms of money coming into the business, not just physical cash.

• To advertise products
• To prove a transaction occurred
• To set prices
• To pay employees

Answer: To prove a transaction occurred

Source documents are evidence of transactions. They are not for advertising or setting prices. They provide proof that a transaction actually happened, which is essential for accurate accounting, audits, and resolving disputes. Without source documents, a business cannot justify its records to SARS or during an audit.

• Cash slip
• Invoice
• Deposit slip
• Cheque

Answer: Invoice

Invoices are used for credit sales. Cash slips are for immediate payment. An invoice tells the buyer how much is owed and when to pay. This is important for tracking money that will be received in the future, not immediately.

• Higher profits
• Lower expenses
• Inability to prove sales
• More customers

Answer: Inability to prove sales

Without duplicates, the business cannot prove sales for audits or disputes. This is a common exam pitfall. If SARS audits the business, it will not accept sales that are not backed by source documents, which can lead to penalties or loss of credibility.