Naming convention for multiple star systems
The purpose of the notation is to indicate how the system is physically constructed, to indicate which stars orbit which - especially useful in hirachically organized stellar systems. So both ways are correct as their meaning is understood.
The notation I encounter most often is the first one you indicate: indicating with capital letters the systems which orbit the common pericenter of the overall system. With non-capital letters the components of the upper level are distinguished. And keeping it more readable, numbers are used for the 3rd level if further distinction is needed for a 3rd level.
However this nomenclature is not unique - and there is so far no general consensus. See the Washington Multiplicity Catalog for a take on getting some order at a given time and the IAU working group on stellar names.
For a given system the designation might be more traditional and depend on order of discovery and naming by discoverer than following a fixed scheme. See also the discussion of future nomenclature on stellar system components in the corresponding wiki article.