An exposition of the principles of division, nomenclature, and definition is undertaken, as synthesized from other disciplines such as logic, biology and social science. Applying these principles to the credit side of a balance sheet it becomes clear that the existing basis of classification for the credit side and its coordinate subdivisions is deficient. The concept of equity does not provide a basis for articulating categories that are exhaustive and mutually exclusive. The rationale explaining these categories is contradictory, internally inconsistent and invalid. A proposal is made for a new basis of classification. It is based upon a pervasive characteristic possessed by all items on the credit side of a balance sheet; they represent sources of capital invested in recorded assets. Sources of capital are in turn, demarcated into transitory and standing sources.

The article discusses the study of partnership accounting through role playing. Learning from traditional pedagogical methods the author has in their stead attempted a role-playing sequence in teaching partnership accounting. The motive was threefold: to test a different, and hopefully more effective, teaching method; to stimulate students at the semester's start to a level of concentrated effort, and; to quickly generate the harmony that comes about when students in a class get to know each other. The results of this role-playing technique, has been excellent. Examination results appear to have improved, thus alleviating any concern that coverage of the material might suffer. Because students have to learn about partnerships without formal instruction, the important process of self-learning is stimulated. An ancillary benefit of this technique was the rapprochement that ensued, both between students, as well as between students and teacher. The professor's part is one of a silent on-looker who is present for consultation on knotty problems that may arise during the simulation.