Question

Countries that have similar rules for financial accounting and tax accounting, rely more on debt financing, and have historical political and economic ties with Germany are referred to as what types of countries?

Code law countries

European Union countries

Common law countries

Conformist countries

Answer 1

Ans) Code Law Countries

Countries are separated into two groups:-

1. Shareholder’s Oriented: Companies mostly financed through equity. United States, United Kingdom and Sweden are shareholder’s oriented countries. Different rules are applicable for both financial accounting and tax accounting.
2. Creditor Oriented: Companies mostly rely on debt finance. Germany, France and Spain are Creditor oriented countries. Same rules are applicable for both financial accounting and tax accounting.