Recording cash discounts in books of prime entry

Steps:

• Define cash discount received as a reduction in purchase price for prompt cash payment.
• Identify cash book as the prime entry for all cash inflows and outflows.
• Note that cash discount received adjusts the cash payment to suppliers.
• Confirm by matching to standard accounting practice for cash transactions.

Why A is correct:

• Cash book records cash receipts and payments, including discounts received, as per double-entry bookkeeping principles for immediate cash effects.

Why the others are wrong:

• B: General journal handles non-routine, adjusting, or non-cash entries, not daily cash discounts.
• C: Purchases journal records credit purchases only, excluding cash-based discounts.
• D: Sales journal tracks credit sales, unrelated to discounts received from suppliers.

Final answer: A