The following subcategorization of financing accounts can be used. For instructive reasons first consider the recording of transactions on cash basis. Recording Transactions . Sources of cash . Sinks of cash .
Every transaction is recorded as a debit and equal credit.
An increase in cash is recorded as a debit on cash account. It must be stressed, however, that this does not imply a suggestion for cash-flow accounting. Such additional accounts are called closing accounts. There are exactly two of them. When the total period is under observation, the balance sheet is not relevant, because in liquidation at the end of the total period the balance sheet becomes an empty set.