Explain the two primary legal systems used around the world and what these differences have to do with accounting standards
The two primary legal systems used around the world are the common law system and the code law system. The common law system has its roots in the United Kingdom and, because of historical ties, is also the system used in the United States. In common law countries, there are generally fewer statutes written into the laws and thus more reliance on interpretation by the courts. In code law countries, such as Germany, there are more detailed rules written into the statutes.
Accounting standards are generally more detailed in common law countries such as the United States because less-detailed laws are written in the statutes provided by the government. In code law countries, more detailed rules are written directly into the statutes.
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