Doing Business In Sweden - Accounting Principles and Practices

Accounting Conventions

Swedish financial statements are based on accrual accounting and the historical-cost convention. The principle of conservatism recognising anticipated losses but deferring unrealised gains considered important but, as a practical matter, revenues are generally recognised as prescribed by the tax laws.

Tax System

Taxation rules have a significant effect on Swedish accounting principles. Income for tax purposes must generally be the same as book income, and financial reporting is therefore significantly affected by tax rules. This produces unusual elements in Swedish financial statements, especially the untaxed reserves permitted by tax rules. Good accounting and reporting practice segregates, if possible, the effect of transactions made only to follow tax rules or to gain a tax advantage.