Mostly followed the British Rule. A. Amerlcan approach: In order to understand the rules of debit cnd credit cccording to this appro transactions are divided into the following five cctegones: {i} Transactions relating to owner, e.g. Capital These are personel accounts (0) Transactions relating to other liabilities. e... suppliers of goods. These are mostly pers accounts {i} Transactions relating to assets, e.g.. lond, building, cash bookstock-in-licde, bills receive These are basically all real accounts {iv) Transactions relating to expenses, e.g. rent, sciary, comission. wages, cartoge - These nominal accounts (v) Transactions relating to revenues. e.g., interest recoved dividend received, sole of goo Those cronominal accounts To Sum Up For Assets Dr. Cr For Llabilitles Or CI For Capital DI Cr Increase in Assets Decrecse in Assels Decrease in liabilities Increase in Liabilities Decrecse in Capital Increcse in Capital Decrecse in Income Increase in Income Increcse in Expense Decrecse in Expense Increcse in Stock Decrecse in Stock For Incomes Dr. Cr. Dr. For Expense Cr For Stock Dr. CI B. British Approach or Double Entry System: When one identifies the account that is getting cffected by c transaction cnd type of the occo the next step is to apply the rules to decide whether the cccounting treotrrent is to debit or credit account. The Golden Rules will guide us whether the account is to be debited or credited. FUNDAMENTALS OF ACCOUNTINGTI 2 Accounting Process These rules are shown below: Personal Account Deoit the receiver or who owes to business Credit the giver cr to whom business owes Real Account Debit what comes into business Credit what goes cut cf business