The proper treatment of debt finance in current cost accounting has been the subject of considerable debate in the literature, and there is considerable variation in the official standards issued in different countries. Opposition to making a 'gearing adjustment' against income seems to be due in part to doubts as to whether or not such treatment is compatible with physical capital maintenance. This article considers the financing implications of treating debt in this fashion in an entity (a) whose revenue is set at a level to ensure that replacement andfinancingcosts are just covered and (b) which renders accounts on a discounted present value basis. It is shown that as long as debt is treated in a fashion consistent with the concept of 'real income' employed there is no problem.