_____ Which of the following items is a factor in determining the functional currency of a foreign unit?
A) Whether the foreign unit's earnings are being reinvested indefinitely.
B) Whether the exchange rate fluctuates above normal due to noninflationary factors.
C) The extent of centralized versus decentralized decision making.
D) Whether the foreign unit sells its products locally or to customers in the United States.
E) None of the above.

Question

Quizplus · Accepted Answer

The functional currency is determined by the currency of the primary economic environment in which the foreign unit operates, which includes factors like where the sales are made.

_____ Which of the Following Items Is a Factor in Determining