Comparison of traditional approach with Modern approach or Accounting Equation approach:

Traditional approach	Modern approach
Personal account: (other than those relating to owner) having debit balance (other than those relating to owners) having credit balance Those relating to owners	Asset a/c Liabilities a/c Capital a/c
Real account	Asset a/c
Nominal account: Relating to expenses Relating to revenue	Expenses a/c Revenue a/c

Illustration 2:

Classify the following accounts according to Traditional and Modern approach

1. Capital a/c	2. Drawings a/c	3. Building purchased
4. Purchases account	5. Sales account	6. Carriage inward
7. Carriage outward	8. Cash received	9. Cash paid
10. Interest paid	11. Interest received	12. Commission paid
13. Comm received	14. Discount allowed	15. Conveyance charges
16. Sales promotion exp	17. Entertainment expenses	18. Subscription paid.
19. Subscription received	20. Light,Power & Electricity	21. Telephone, postage and telegram
22. Repairs incurred	23. Insurance premium paid	24. Bad debts written off
25. Bad debts recovered	26. Discount received	27. Postage & stationery purchased

28. F&F purchased	29. Bank a/c	30. Wages & Salaries paid
31. Travelling expenses	32. current a/c of the partner	33. Loan a/c of a partner
34. Sales return	35. Bank overdraft a/c	36. Loan a/c of the partner
37. O/s salaries a/c	38. Prepaid rent a/c	39. Interest accrued a/c
40. Interest received in advance