Modern Approach of Accounting

Modern rules of accounting feature image

Modern Approach of Accounting

The Journal is the basis of the accounting system, In Journal we record all day to day transaction of business. For journalizing all day to day transaction of the business we have to know about two type of principles/ Rules/ Modern Approach of Accounting shown in the diagram below.

chart of rules of accounting  - Modern Approach of Accounting
chart of rules of accounting

If you did not read our article on Traditional/Golden rules of accounting then click here

Now, I will explain all these five Modern rules of Accounting individually with examples:

1. Capital Account
2. Assets Account
3. Liabilities Account
4. Expenses Account
5. Income Account

1. Capital Account

This rule is applicable to all transactions which are related to an owner of the business.

Example of Capital Accounts:- Cash invested by an owner into business, Cash withdraw by an owner from the business, Life Insurance premium paid for the life of the owner,  Etc.


Click here to check the meaning of a Capital.

Now the question: –

Modren rules of accounting Capital rule  - Modern Approach of Accounting
Modern rules of accounting | Capital rule

2. Assets Account

This rule is applicable to all assets of the business when an asset is purchased, sold, depreciated or disposed of.

Example of assets Accounts:- Cash, Land and Building, Plant and Machine, Furniture and Fixture, Trademarks, Etc.


Click here to check the meaning of an asset.

Modren rules of accounting Assets rule  - Modern Approach of Accounting
Modern rules of accounting | Assets rule

3. Liabilities Account

This rule is applicable to all Liabilities of the business when a liability is created, repaid, etc.

Example of Liabilities Accounts:- Bank Loan. Mortgaged Loan Creditors, Short Terms Loans, Etc.

Modren rules of accounting Liabilities rule  - Modern Approach of Accounting
Modern rules of accounting | Liabilities rule

4. Expenses Account

This rule is applicable to all Expenses of the business.

Example of Expenses Accounts:- Salary, Wages, Rent, Carriage, Freight, Transportation, Purchases of Goods only, Etc.

Modren rules of accounting Expenses rule  - Modern Approach of Accounting
Modern rules of accounting | Expenses rule

5. Income Account

This rule is applicable to all Income of the business.

Example of Expenses Accounts:- Sale of goods, Gain on Sale of Assets, Commission Received, Rent Received, Discount Received, Bad Debts Recover,  Etc.

Modren rules of accounting Income rule  - Modern Approach of Accounting
Modern rules of accounting | Income rule

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