Due to the Roman law system, German financial accounting is regulated by law in a very detailed manner. The most important part of the accounting law is the Handelsgesetzbuch (HGB, commercial code), which contains regulations dependent on the legal form of the business, size and sector. In accounting for all events, even unforeseeable ones, the Grundsätze ordnungsmäÞiger Buchführung (GoB, principles of regular accounting) must be followed. Although the GoB originate from commercial accounting, they also influence tax accounting, since there is a unified income approach for both commercial and tax purposes. Group accounting is legally (although not in practice) irrelevant for dividends and legally (as well as in practice) irrelevant for taxation.

The financing of German corporations has a number of characteristic features, including a low rate of visible equity financing, a small number of listed corporations, a small number of private shareholders and an ownership structure in which private shareholders play little part. Accordingly, the main objectives of financial accounting in Germany are financial capital maintenance through prudent determination of profit and the generation of information about the net worth and results of a business through either published or unpublished balance sheets. Information is an important aim of financial statements, but the protection of creditors is the dominant concern.

Limited companies are the only entities required to give a true and fair view of financial statements; this is restricted by the GoB, which aim to protect creditors by prudent profit determination. This fits with both the reduction of tax bases in order to defer taxes and the financing environment, where loans by banks or groups are a more important source than equity.