Understanding Trade Discounts Steps:

• Identify key statements: Assume 1 (incorrect: trade discount affects net price but not recorded separately), 2 (incorrect: applies only to trade buyers), 3 (correct: reduces list price for volume purchases), 4 (correct: not entered in accounting books as deduction).
• Evaluate pairs: Check which combine true statements.
• Eliminate A (includes false 1 and 2).
• Eliminate B (includes false 1).
• Eliminate C (includes false 2).
• Confirm D (true 3 and 4).

Not enough information: Statements 1–4 not provided, making full verification impossible.

Why D is correct:

• Trade discounts (3 and 4) are off-list reductions for bulk trade sales, excluded from invoice accounting per standard bookkeeping law.

Why the others are wrong:

• A: Includes false statements 1 and 2 on recording and applicability.
• B: Includes false statement 1 on accounting treatment.
• C: Includes false statement 2 on buyer scope.

Final answer: D