Rails extending ActiveRecord::Base

There are several approaches :

Using ActiveSupport::Concern (Preferred)

Read the ActiveSupport::Concern documentation for more details.

Create a file called active_record_extension.rb in the lib directory.

require 'active_support/concern'

module ActiveRecordExtension

  extend ActiveSupport::Concern

  # add your instance methods here
  def foo
     "foo"
  end

  # add your static(class) methods here
  class_methods do
    #E.g: Order.top_ten        
    def top_ten
      limit(10)
    end
  end
end

# include the extension 
ActiveRecord::Base.send(:include, ActiveRecordExtension)

Create a file in the config/initializers directory called extensions.rb and add the following line to the file:

require "active_record_extension"

Inheritance (Preferred)

Refer to Toby's answer.

Monkey patching (Should be avoided)

Create a file in the config/initializers directory called active_record_monkey_patch.rb.

class ActiveRecord::Base     
  #instance method, E.g: Order.new.foo       
  def foo
   "foo"
  end

  #class method, E.g: Order.top_ten        
  def self.top_ten
    limit(10)
  end
end

The famous quote about Regular expressions by Jamie Zawinski can be re-purposed to illustrate the problems associated with monkey-patching.

Some people, when confronted with a problem, think “I know, I'll use monkey patching.” Now they have two problems.

Monkey patching is easy and quick. But, the time and effort saved is always extracted back sometime in the future; with compound interest. These days I limit monkey patching to quickly prototype a solution in the rails console.

You can just extend the class and simply use inheritance.

class AbstractModel < ActiveRecord::Base  
  self.abstract_class = true
end

class Foo < AbstractModel
end

class Bar < AbstractModel
end

You can also use ActiveSupport::Concern and be more Rails core idiomatic like:

module MyExtension
  extend ActiveSupport::Concern

  def foo
  end

  module ClassMethods
    def bar
    end
  end
end

ActiveRecord::Base.send(:include, MyExtension)

[Edit] following the comment from @daniel

Then all your models will have the method foo included as an instance method and the methods in ClassMethods included as class methods. E.g. on a FooBar < ActiveRecord::Base you will have: FooBar.bar and FooBar#foo

http://api.rubyonrails.org/classes/ActiveSupport/Concern.html