The Distribution Function
The fi nancial statements play an active role when the distribution of the fi rm’s income is determined by the fi gures in the fi nancial statements. When this is the case, the fi nancial statements are said to perform the distribution function. This may happen when the state, through its laws and regulations, requires that certain distributions of the fi rm should be determined wholly or partially on the basis of the fi gures reported in the accounts. This is commonly the case with two important distributions to stakeholders: tax and dividends. This chapter starts with an analysis of the distribution function in Germany, where it is particularly important.