Module 3: Documents and authorisation of documents CASE STUDY


Work in groups. Thembisa Burton has started a business selling fashionable clothing items to young adults. Her business is called Stuff from Thembi. On consultation with her accountant, Shaun, she had all her documents printed with the name of the business and other information. Shaun also insisted that she opens up a bank account in the name of the business. Shaun is trying to teach Thembisa some accounting and has tried to get her to practise some accounting concepts and wants her to understand the purpose of source documents.


Answer the following questions: 1. State which source document will be used by the business to record the transaction in the books of the business. Also state if it is an external or internal source document: • Bought R13 500 worth of inventory on credit from Bootlegs CC. • Inventory to the value of R1 500 was damaged and had to be returned to Bootlegs CC. • Paris bought a handbag for R800 cash. • Received rent for part of the building for the month – R4 000. • Sold goods on credit to D Hoskins for R8 000. • Paid R3 000 to Bootlegs CC. • D Hoskins paid her account.


2. Why do you think the name of the business needs to be preprinted on the business documents?


3. Name two other details that should be preprinted on documents. 4. Why does Thembisa need to open an account in the name of the business?


3.4 Opening of a new business


When an entrepreneur decides to start a business, a few decisions need to be made, such as: • What type of business will it be? Will the business sell products or provide some kind of service?


• The business must have a name. It has to be unique and original. • All the legal paperwork must be completed so that the business can receive the necessary licences to do business, and so that the government is aware that the business exists.


• What type of accounting system will be used by the business? • Open a bank account for the new business.


3.5 Banking and bank accounts


A bank transaction takes place between the new business and the bank, for example when money is paid into the bank account or when money is withdrawn from it. It is important to choose the right type of account for the business's needs.


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