According to modern approach, accounts are classified into six categories: (1) Assets Account; (2) Liabilities Account: (3) Capital Account; (4) Revenue Account; (5) Expense Account; and (6) Withdrawal Account Assets Account : These accounts are accounts of assets and properties such as land, building, plant, machinery, patents, cash investments, inventory, etc. Liabilities Account: These accounts are accounts of lenders, creditors for goods, creditors for expenses, etc. Capital Account : It is the account of the proprietor / partner who invested money in the business. Revenue Account: These are accounts of incomes and gains. Examples are : sales, discount received, interest received, etc. These accounts accumulate data required for preparation of Trading, Profit and Loss Account q2 4. -depreciation, rent, rates and taxes, etc. Like Revenue Account, these accounts accumulate data required for preparation of Trading, Profit and Loss Account Withdrawal Account: It is the account related to drawings by the proprietor / partners. Rules for Debit and Credit SI. No. Types of Account Account to be debited Account to be credited 1. Assets Account Increase Decrease 2. Liabilities Account Decrease Increase 3. Capital Account Decrease Increase Revenue Account Decrease Increase 5. Expense Account Increase Decrease 6. Withdrawal Account Increase Decrease Illustration Analyse the following transactions, state the nature of accounts and state which account will be debited and which account will be credited. (1) Kabir started his business with a cash of 50,000 (2) Borrowed from Naresh 30,000 (3) Purchased furniture for 20,000 in cash from Modern Furniture House (4) Purchased furniture from Bombay Safe for 40,000. (5) Purchased goods for cash 15,000. (6) Purchased goods from Romen 30,000 (7) Sold goods for Cash to Karim 25,000 (8) Sold goods to Shyam on Credit 30.000 3.8 Accounting Cycle (9) Received cash from Shyam 20.000 (10) Paid cash to Romen 20,000. (11) Deposited cash into bank 15,000 for opening an account (12) Withdrew cash for personal use 1,000 (13) Withdrew from bank for office use 5,000. (14) Withdrew from bank for personal use