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Financial Accounting by Robert Nothhelfer

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2Introduction to German accounting

2.1Legal framework

2.1.1Legal regulations

Because Germany is a member of the European Union (EU), German accounting is harmonized with European accounting rules, meaning the EU sets up a framework that must be applied by the member states but leaves certain decisions up to member states. EU directives are not directly applicable law but must be transferred and enacted by the member states. Thus, German accounting will be explained, not the EU framework, keeping in mind that German accounting complies with the EU framework.

Starting with the transferral of the fourth, seventh and eighth EC directives into German law, the “Accounting Directive Act” (Bilanzrichtliniengesetz) was enacted in 1985. It included a summary ...

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