CB/DB deals only with liabilities relating to moneys withheld from salary checks, and mortgages (encumbered loans).

As an example, when you issue a salary check, the gross pay may be $1000, but there will also be money withheld for Federal Income Tax, Social Security, Medicare, and perhaps state and local taxes. The net amount of the check may be $800. At the time of the payment of the salary check, you have actually removed $800 from your bank account, and retain the other $200 within that account that actually belongs to the taxing authorities. Until that payment is made, the $200 is considered a liability retained in your account. When the payment is made, the liability is closed out. Until the next salary cycle.... If you make payments on a quarterly basis, the liability will continue to increase each month until paid; if the payment for the first quarter is made in April, and April salary checks are written, you will still show a liability at the end of that month. For that reason, you should always look at the balance in your Fund Account, rather than in your Asset Account, when deciding on what bills you can pay at any point in time.

Mortgage Liabilities work differently. After a building project, let's say you now have a new building worth $1,000,000 and that you have a $500,000 mortgage on it. In this case, you would have an asset valued at $1,000,000, made up of $500,000 in equity (fund) and a $500,000 liability. As you make mortgage payments, each one reduces the amount of your mortgage by that part of the payment toward the principal, and increases your equity in the building by the same amount. In order to make this happen automatically, whenever you post a check containing a mortgage payment, CB/DB reduces the mortgage the same way it reduces the bank account for the cash sent to the mortgage company. In addition, it generates an income Journal Entry to increase the equity in the building by the amount of the principal reduction.