Can some one explain or point me to an explanation on how to determine whether an ACL should be placed inbound or outbound on an interface? I seem to be having trouble trying to grasp the concept of an interface being either inbound or outbound when traffic passes through it both ways.
Unfortunately no it's not correct but i think youve hit on a key point which may be a better way to explain it
It is not about going through the router rather it's in relation to each router interface.
So if you look at your diagram from a router interface persepctive, lets take fa0/0
inbound means traffic going into that interface towards the router.
outbound means traffic going out of that interface away from the router.
Remember inbound/outbound are in relation to the interface on the router not the clients on subnet A and B.
So either flick the arrows around or the Outbound/Inbound tags and your diagram is correct.