Accounting - Term 3 - Week 8

Imagine Lerato runs a busy spaza shop in Khayelitsha. Every day, she sells cold drinks, bread, and airtime to her neighbours. When a customer pays cash for a loaf of bread, Lerato gives them a cash slip. When a local school buys groceries on credit, she issues an invoice. These pieces of paper—source documents—are proof of every transaction. Without them, Lerato could not track her sales, claim VAT, or prepare for a SARS audit. In accounting, source documents are the first link in the chain: they provide the evidence needed to record transactions accurately. If you skip this step, your records will never match your real business activity. Always start with the document, not your memory.

Think about the last time you bought kota at a local tuck shop. You probably got a small printed slip—that’s a cash slip. If you paid for a taxi ride with a receipt book, that’s a receipt. When Sipho’s hardware in Polokwane sells building materials to a contractor on credit, he issues an invoice. Each document tells a different story: cash slips and receipts mean cash changed hands immediately; invoices mean payment will happen later. The key details to look for are: date, amount, names of buyer and seller, items sold, and whether it’s cash or credit. A common misconception is that all slips are the same—don’t fall for it! Always check if the document says ‘Paid’ or ‘On Account’.

Picture Ahmed, who runs a cellphone repair shop in Durban. He collects all his cash slips and invoices at the end of the day. To keep his books in order, he must record each transaction in the correct subsidiary journal. Cash sales go into the Cash Receipts Journal (CRJ). Credit sales go into the Sales Journal (SJ). If he buys stock on credit, that goes into the Purchases Journal (PJ). The rule: let the document guide you. For example, a cash slip for R150 airtime sold goes into the CRJ, while an invoice for R2 000 in phone repairs to a school (on credit) goes into the SJ. Many learners mix up journals—always ask: did money move today, or is it a promise to pay?

Load-shedding hits, and Lerato writes a cash slip by hand. She accidentally writes R50 instead of R500. If she records this error, her books will be wrong. Accountants must check for mistakes: wrong dates, incorrect amounts, missing signatures. If you find an error, draw a neat line through the mistake, write the correction above, and sign it. Never use correction fluid. In exams, if you spot a document error, explain how you’d fix it. A common error is recording the wrong amount—always double-check the document before entering it in the journal. This attention to detail is what separates a pass from a distinction in Paper 1.

Step 1: Read the cash slip from Thandi’s tuck shop. It shows: Date: 2 August, Item: 2 loaves of bread, Amount: R30, Paid: Cash. Step 2: Identify the transaction type. Because it’s a cash slip and says ‘Paid: Cash’, this is a cash sale. Step 3: Decide which journal to use. Cash sales go into the Cash Receipts Journal (CRJ). Step 4: Record the entry. In the CRJ, write the date (2 August), details (‘Bread’), and amount (R30) in the correct columns. Final answer: The R30 cash sale is recorded in the CRJ on 2 August. Sanity check: The shop received cash, so it must be in the CRJ.

Step 1: Read the invoice from Sipho’s hardware. It shows: Date: 5 August, Item: 10 bags of cement, Amount: R1 500, Buyer: Polokwane Primary School, Terms: 30 days to pay. Step 2: Identify the transaction type. An invoice with ‘30 days to pay’ means this is a credit sale. Step 3: Decide which journal to use. Credit sales go into the Sales Journal (SJ). Step 4: Record the entry. In the SJ, write the date (5 August), details (‘Cement to Polokwane Primary’), and amount (R1 500). Final answer: The R1 500 credit sale is recorded in the SJ on 5 August. Sanity check: No cash received yet, so it must be credit.

Question: Lerato sells airtime for R50 and gives the customer a cash slip marked ‘Paid’. Which journal should she use? Let’s think: Is this cash or credit? The slip says ‘Paid’, so it’s cash. Which journal records cash received? The CRJ. Worked response: Record R50 in the CRJ with details ‘Airtime’. Remember, a cash slip always means cash was received immediately, not later. Now you try: Ahmed sells a phone cover for R120 and issues a cash slip marked ‘Paid’. Which journal? Answer: CRJ. This is because the money was received on the spot, so it must be entered in the Cash Receipts Journal.

Question: Sipho issues an invoice for R800 but accidentally writes the date as ‘25 July 2025’ instead of ‘2024’. What should he do? Think: Is this a serious error? Yes, because the date affects the accounting period and could cause confusion in the records. Worked response: Sipho should draw a line through ‘2025’, write ‘2024’ above, and sign next to the correction. This keeps the document clear and audit-friendly. Now you try: Thandi writes R35 instead of R350 on a cash slip. What should she do? Answer: Draw a line through R35, write R350 above, and sign. This way, the correction is visible and the document remains valid for accounting and auditing purposes.

1. List three types of source documents used in South African businesses, such as cash slips, receipts, and invoices. 2. State which journal records cash received from customers and explain why. 3. Identify if a cash slip means cash or credit, and justify your answer with an example from a local shop.

1. Record a sale of R200 airtime (cash slip) in the correct journal, showing all details. 2. Record a credit sale of R1 000 groceries (invoice) in the correct journal, explaining your choice. 3. Spot and correct the error: A receipt shows R90, but the actual cash received was R900. Describe how you would fix this on the document and in the journal.

1. Analyse a scenario: Ahmed issues an invoice for R2 500 for phone repairs to a school, but the amount was mistakenly entered as R250 in the Sales Journal. Explain the error and how to fix it, including the impact on the business’s records. 2. Compare cash slips and invoices—give two differences and examples of when each is used. 3. Justify why it’s important to check source documents before recording transactions, using a real-life example from a South African business and explaining the consequences of mistakes.

• Invoice
• Cash slip
• Statement
• Order form

Answer: Cash slip

A cash slip is given when cash is received immediately. Invoices are for credit sales, not cash.

• Cash Receipts Journal
• Sales Journal
• Purchases Journal
• Petty Cash Journal

Answer: Sales Journal

Credit sales are entered in the Sales Journal. Many confuse this with the CRJ, which is for cash.

• Cash was received
• Goods were sold on credit
• No payment was made
• Goods were returned

Answer: Cash was received

‘Paid’ means cash changed hands. Credit sales would not say 'Paid'. Many learners think a slip could be for credit, but only invoices are for credit sales. Always check for the word 'Paid' to confirm cash was received.

• Invoice
• Cash slip
• Bank statement
• Sales Journal

Answer: Sales Journal

The Sales Journal is a book of first entry, not a source document. The others are.

• Goods are sold on credit
• Cash is received
• Goods are ordered
• A payment is promised

Answer: Cash is received

Receipts are proof of cash received. Credit sales use invoices. Some learners confuse receipts with invoices, but only a receipt confirms that cash was actually received by the business.

Answer: R250

Add all amounts: 50 + 120 + 80 = 250. Some may forget to add all slips.