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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 buys stock from a wholesaler or sells airtime to a customer, she receives or issues a slip, invoice, or receipt. These papers are called source documents—they prove that a transaction happened. For example, when Thandi buys cooldrinks from Ahmed’s Cash & Carry, she gets a cash invoice. If she sells bread to Sipho on credit, she issues a duplicate invoice. Source documents are the first step in the accounting process. They help businesses keep accurate records, avoid disputes, and prepare for SARS audits. Many learners think any slip is a source document, but only documents that prove a business transaction count. Always check that the document shows the date, amount, parties involved, and a description of the goods or services.
Think about the last time you bought groceries at Boxer in Mthatha. You probably got a till slip—this is a cash receipt. In accounting, cash receipts record money received immediately. On the other hand, if you buy on account and pay later, you get an invoice—this is a credit transaction. For example, when Lerato’s tuckshop supplies snacks to a local school on credit, she issues an invoice. The school pays her after 30 days. The main types of source documents are cash receipts, duplicate receipts, cash invoices, duplicate invoices, and bank deposit slips. A common mistake is mixing up cash and credit documents. Remember: cash means money moves now; credit means money moves later.
Sipho sells airtime for cash and gives a receipt to his customer. He records this in the Cash Receipts Journal (CRJ). When he buys stock on credit from a supplier in Durban, he gets an invoice and records it in the Purchases Journal (PJ). Each journal has a specific purpose: the CRJ records all cash received, the Cash Payments Journal (CPJ) records all cash paid, and the PJ records credit purchases. If you put a cash transaction in the PJ, your totals will be wrong and your trial balance won’t balance. Always check the source document type and the payment method before recording. Many learners forget to check the date or misread the document, leading to errors in the journals.
Load-shedding hits Polokwane and Ahmed rushes to record his sales before his battery dies. In the rush, he accidentally records a cash sale in the Purchases Journal. This is a common error—misclassifying the transaction. To avoid this, always ask: Who is paying? Is it cash or credit? What is being bought or sold? For example, a bank deposit slip means cash was received and should go in the CRJ. If you see a duplicate invoice, it’s likely a credit sale. If you spot an error, draw a neat line through the mistake, write the correction above, and initial it. Never use correction fluid. This keeps your records honest and audit-ready.
Step 1: Read the source document. Thandi’s spaza shop issues a till slip for R120 to a customer who pays cash for groceries. Step 2: Identify the transaction type. This is a cash sale because the customer paid immediately. Step 3: Choose the correct journal. Cash sales go in the Cash Receipts Journal (CRJ). Step 4: Record the details. In the CRJ, enter the date, details (e.g., 'Cash sale – groceries'), and amount (R120). Step 5: Check your work. The amount matches the till slip, and the transaction is in the correct journal. Final answer: Record R120 in the CRJ as a cash sale. Sanity check: If this was a credit sale, there would be an invoice, not a till slip.
Step 1: Read the source document. Sipho’s tuckshop receives an invoice for R500 from Durban Wholesalers for cold drinks, to be paid in 30 days. Step 2: Identify the transaction type. This is a credit purchase—Sipho will pay later. Step 3: Choose the correct journal. Credit purchases go in the Purchases Journal (PJ). Step 4: Record the details. In the PJ, enter the date, supplier (Durban Wholesalers), and amount (R500). Step 5: Check your work. The invoice shows payment is due in 30 days, confirming it’s a credit purchase. Final answer: Record R500 in the PJ as a credit purchase. Sanity check: If Sipho paid immediately, it would go in the CPJ, not the PJ.
Question: Lerato deposits R1 000 from daily sales into her business bank account. The bank gives her a deposit slip. Which journal should she use? Let’s think: The deposit slip proves cash was received and banked. This is a cash receipt, not a credit transaction, so it must be recorded as money coming in. Worked response: Record R1 000 in the CRJ, with 'Bank deposit – sales' as details. This ensures the cash inflow is correctly captured. Now you try: Ahmed receives R2 500 from a customer and deposits it. Which journal? Answer: CRJ. Always remember, any cash received and banked is recorded in the CRJ, never in the CPJ or PJ.
Question: Thandi buys stock from Polokwane Suppliers and receives a duplicate invoice. Payment is due in 60 days. Is this cash or credit? Let’s reason: A duplicate invoice and delayed payment mean credit, not cash. This means the business owes money and will pay later. Worked response: Record the purchase in the PJ as a credit purchase. Your turn: Sipho sells airtime and issues a till slip. Cash or credit? Which journal? Answer: Cash sale, record in CRJ. Remember, a till slip always means cash was paid immediately, so it never goes in the PJ.
1. List three types of source documents used in a small business, such as a till slip, duplicate invoice, and bank deposit slip. 2. State which journal records cash received and explain why. 3. Identify if a till slip is used for cash or credit sales, and justify your answer with an example.
1. Record a R350 cash payment for stationery using the correct journal and explain your choice. 2. A customer buys on credit for R800. Which document and journal do you use, and why? 3. Explain why a bank deposit slip is not used for credit sales, using a real-world scenario.
1. Analyse a scenario: Ahmed buys goods on credit (R1 200), pays cash for rent (R2 000), and receives R500 from a customer. Record each in the correct journal and explain your reasoning. 2. Justify why recording a cash sale in the Purchases Journal is incorrect, and describe the possible consequences for financial statements. 3. Predict the impact on the trial balance if cash and credit transactions are mixed up, and suggest how to prevent this in a busy shop.
Answer: Till slip
A till slip is issued for cash sales. Many confuse it with a duplicate invoice, which is for credit sales.
Answer: Purchases Journal
Credit purchases are recorded in the Purchases Journal. The CRJ is for cash received, not credit.
Answer: Business logo
A logo is nice but not essential for proof. Date, amount, and parties are required for validity.
Answer: Cash invoice is for immediate payment
A cash invoice is for cash sales; duplicate invoices are for credit sales. Learners often swap these.
Answer: Overstated purchases
Recording sales in the PJ inflates purchases. This is a common error that affects the trial balance.
Answer: Cash payments for expenses and cash purchases of stock.
The CPJ records all cash outflows, such as expenses (e.g., electricity, rent) and purchases paid immediately. It does not record credit purchases or money received. Learners often forget that only immediate cash outflows are recorded here.
Answer: It proves that cash was received and deposited, serving as evidence for the CRJ.
A deposit slip verifies the receipt and banking of cash, which is vital for accurate records. Without it, there is no proof that the business received and banked the money, which could cause problems in audits or when checking the CRJ.
Answer: R500
Add all amounts: 100 + 250 + 150 = 500. This tests basic addition and cash receipts.
Answer: Cash Payments Journal
Cash outflows like paying for electricity go in the CPJ, not the CRJ. Many learners confuse cash payments with receipts, but only money going out is recorded in the CPJ. Always check if the business is paying or receiving.
Answer: Duplicate invoice
Credit sales use duplicate invoices. Many learners confuse these with cash receipts, but a duplicate invoice is specifically issued when goods are sold on credit, not for immediate cash.
Answer: Errors in financial statements
Mixing up transactions leads to inaccurate records and incorrect financial statements. This can cause the trial balance not to balance, and the business might make wrong decisions based on faulty information.
Answer: It shows who made the correction and keeps records honest for audits.
Initialling corrections prevents fraud and maintains the integrity of the records. Auditors and SARS want to see a clear record of who made changes, so unsigned corrections can lead to suspicion or penalties.