Question

The functional currency is the currency: a) Of the country in which the parent is located...

The functional currency is the currency:

a) Of the country in which the parent is located

b)Of the country in which the subsidiary is located

c) In which the subsidiary maintains its accounting records

d) Of the environment in which a subsidiary primarily generates and expends cash

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Homework Answers

Answer #1

a. Of the country in which the parent is located - Called the reporting currency.

b. Of the country in which the subsidiary is located - Called the transactional currency.

c. In which the subsidiary maintains its accounting records - Called the transactional currency.

d. Of the environment in which a subsidiary primarily generates and expends cash - Called the functional currency.

Functional currency is the one which has the greatest economic impact on company. It may be transactional local currency unit, different local currency unit or US dollars.

Functional currency is the one in which the entity generates and expands cash.

The answer is D.

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