Question

German companies do not recognize the profit until the project is completely finished and they have been paid. recognize profits before the project is finished. recognize profits when the project is initialized. do not recognize the profits until they have been formally audited

Answer 1

Answer:

German companies do not recognize the profit until the project is completely finished and they have been paid.

Explanation:

German companies prepare their accounting balances under IFRS standards (common for all EU member countries) and German GAAP.

Under IFRS standards, revenue must be recognized when the business satisfies a performance obligation.

German GAAP is very prudent in determining profits, that is why they are only recognized once a project is completely finished and it has been completely paid.

Some specific German rules are to starting to change due to globalization, but others are still subject to legal requirements.