Accounting - Term 2 - Week 5

Imagine Thandi runs a minibus taxi business in Khayelitsha. Every day, she collects cash from passengers and gives out handwritten receipts. These receipts are source documents—proof of each transaction. Without them, Thandi can’t prove her income to SARS or track her earnings. In South Africa, source documents like cash slips, invoices, and bank deposit slips are the backbone of honest business. They provide evidence for every cent that enters or leaves a business. The rule: every transaction must be supported by a source document. This ensures the accounting records are trustworthy. Many learners think only big companies need these documents, but even a tuck shop in Mthatha needs them to avoid confusion and disputes. Whether you’re selling vetkoek or running a car wash, source documents keep your business accountable.

Sipho owns a small grocery in Polokwane. He uses different documents for different transactions: cash register slips for sales, EFT proofs for supplier payments, and duplicate order books for deliveries. Each document has a specific purpose. Cash slips show cash received, invoices show goods sold on credit, and bank deposit slips prove money was banked. A common misconception is that all documents are the same. Actually, each one tells a different story. For example, an invoice is not proof of payment—it’s a request for payment. Only a receipt or bank statement confirms payment. In South Africa, you’ll often see handwritten receipts, especially where there’s load-shedding and card machines are down. Knowing the difference between original and duplicate documents is crucial: originals go to the customer, duplicates stay with the business for records. This helps if there’s ever a dispute or SARS audit.

Lerato runs a spaza shop in Soweto. She receives a delivery of cold drinks and gets an invoice from the supplier. Later, she pays by EFT and receives a proof of payment. To keep her records accurate, she must analyse each document: What happened? Who was involved? Was it cash or credit? She then records the transaction in her books. The process: identify the document, extract the key details (date, amount, parties), and record it in the correct journal. For example, a cash slip for a sale goes in the cash receipts journal, while an invoice for goods bought on credit goes in the purchases journal. Many learners forget to check the date or mix up the journals. Always double-check: Does the document match the transaction you’re recording? This habit prevents errors and keeps your books exam-ready.

Step 1: Thandi sells cold drinks for R150 cash and issues a till slip to the customer. Reason: The till slip is the source document for a cash sale. Step 2: Identify the details: Date (e.g., 10 May 2024), Amount (R150), Customer (walk-in), Type (cash sale). Step 3: Record in the Cash Receipts Journal (CRJ): Date: 10 May 2024; Details: Cash sale; Amount: R150. Reason: All cash received from sales goes into the CRJ. Step 4: File the duplicate till slip for records. Final answer: The cash sale is correctly recorded in the CRJ. Quick check: The amount on the till slip matches the entry.

Step 1: Sipho pays his supplier, Ahmed, R2 000 by EFT for stock. He receives a proof of payment from his bank. Reason: The EFT proof is the source document for this payment. Step 2: Identify the details: Date (12 May 2024), Amount (R2 000), Supplier (Ahmed), Type (EFT payment). Step 3: Record in the Cash Payments Journal (CPJ): Date: 12 May 2024; Details: Payment to Ahmed; Amount: R2 000. Reason: All payments made by EFT or cash go into the CPJ. Step 4: Attach the proof of payment to the invoice for audit purposes. Final answer: The payment is correctly recorded in the CPJ. Quick check: The amount on the proof matches the journal entry.

Question: Lerato buys bread on credit from a bakery in Durban for R500. She receives an invoice. Let’s think: What does the invoice mean? It means she owes the bakery and hasn’t paid yet, so it’s a credit purchase. The correct journal is the Purchases Journal. Worked response: Record in the Purchases Journal: Date: today’s date; Details: Bread from bakery; Amount: R500. Always check the document type—an invoice means credit, not cash. Similar question: Sipho buys cleaning supplies on credit for R300 and gets an invoice. Where does he record it? Answer: Purchases Journal, R300. Remember, invoices for credit purchases always go here.

Question: Ahmed pays R250 cash for taxi repairs in Mthatha and gets a handwritten receipt. Let’s break it down: A receipt means cash has been paid. The correct journal is the Cash Payments Journal. Worked response: Record in the Cash Payments Journal: Date: today’s date; Details: Taxi repairs; Amount: R250. Always check that the receipt is filled in fully—missing details can cause problems later. Similar question: Thandi pays R120 cash for airtime and gets a receipt. Where does she record it? Answer: Cash Payments Journal, R120. Receipts for cash payments always go in the CPJ.

1. List three types of source documents used in South African businesses, such as a till slip, invoice, and bank deposit slip. 2. State which journal a cash sale is recorded in and explain why. 3. Identify the correct source document for a credit purchase and describe its purpose in the transaction.

1. Explain the difference between an invoice and a receipt, giving an example of each from a local business. 2. Classify each: EFT proof, till slip, bank deposit slip—state the type of transaction and the correct journal for each. 3. Record a R900 cash payment for stock using the correct journal and document, and explain why accuracy matters.

1. Analyse this scenario: Sipho receives an invoice for R2 500, pays R1 000 cash, and the balance by EFT. Record each step with the correct documents and journals, explaining your reasoning. 2. Justify why keeping duplicates of source documents is essential in a SARS audit, using a real-world example. 3. Interpret a handwritten receipt with a missing date—what is the risk, and how should it be fixed to ensure the document is valid for business and tax purposes?

• Invoice
• Receipt
• Order form
• Quotation

Answer: Receipt

A receipt confirms payment was made. An invoice only requests payment, which is a common confusion. Receipts are vital proof for both the business and the customer, especially if there is a dispute or an audit.

• Cash Receipts Journal
• Cash Payments Journal
• Purchases Journal
• General Journal

Answer: Cash Receipts Journal

Cash sales are recorded in the CRJ. Some learners mix this up with the CPJ, which is for payments. The CRJ is only for money received by the business, not money paid out.

• To decorate the office
• To provide evidence for audits
• To increase expenses
• To confuse customers

Answer: To provide evidence for audits

Duplicates are kept for business records and audits, not for customers or decoration. During a SARS audit, these duplicates prove that the business’s records are accurate and honest. Without them, the business could face penalties or be unable to defend itself.

• Receipt
• Invoice
• Bank statement
• Deposit slip

Answer: Invoice

An invoice is used for credit sales. Receipts are for payments already made. This is a common mistake: learners sometimes think a receipt is given for credit sales, but it is only given after payment.

• Bank deposit slip
• EFT proof
• Sales journal
• Till slip

Answer: Sales journal

A sales journal is a book of entry, not a document proving a transaction. Source documents are original evidence, while journals are used to record and summarise transactions.