Which of the Following Accurately Reflects German Accounting

question 1

Multiple Choice

Which of the following accurately reflects German accounting?

• A) Tax law is influential, because annual accounts are the basis for tax accounts.
• B) The stock market is the major source of funding in Germany, so accounting reflects the needs of investors.
• C) The Germans influenced the 4th Directive of the European Union through the introduction of the true and fair view.
• D) German companies depart from historical cost through widespread use of current value accounting.

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Definitions:

Personal Expense

Expenses incurred by individuals for non-business-related activities, often not tax-deductible.

Goodwill Method

An accounting approach for handling goodwill during a business combination, where goodwill is not amortized but tested annually for impairment.

Capital Balances

The amounts shown in a company’s books representing the capital owned by partners or shareholders.

Profit and Loss

A financial statement, also known as an income statement, that provides a summary of a company's revenues, expenses, and profits/losses over a given period of time.