AMERICAN OR MODERN RULES OF ACCOUNTING:

There are 2 ways to apply rules of accounting, traditional and modern.

Traditional or Golden rules of accounting classify 3 types if accounts.
They are Real, Personal & Nominal accounts.
American or modern rules of accounting classify all a/c’s into 6 different types
Classification of Accounts and Modern Rules:
Type of Accounts Debit Credit
Asset Increase Decrease
Liability Decrease Increase
Capital Decrease Increase
Revenue Decrease Increase
Expense Increase Decrease
Drawings Increase Decrease
(CRADLE)
C – Capital, R – Revenue, A – Assets, D – Drawings, L – Liability, E – Expense
Another way to look at modern rules of accounting is,