Discount Received Account Indicates Cash Discount

Steps:

• Examine the ledger: It shows a "Discount Received" account in Peter's books with entries like bank 380, balance b/d 400, and discount received 200, totaling 400 on both sides.
• Recognize "Discount Received" as a nominal account for income from supplier concessions.
• Classify the discount type: This account records cash discounts (for prompt payment), not trade discounts (for bulk buys, which reduce purchase price directly).
• Confirm recipient: All entries are in Peter's books, so Peter benefits.

Why B is correct:

• In accounting, the Discount Received account specifically captures cash discounts allowed by suppliers for early payment, as defined in double-entry bookkeeping for income recognition.

Why the others are wrong:

• A: Bulk purchases yield trade discounts, deducted at invoice stage without a separate Discount Received entry.
• C: No mention of Rami; the account is Peter's, so recipient is incorrect.
• D: Recipient is Peter, not Rami; bulk type is also mismatched.

Final answer: B