The transactions of a foreign company must be recorded in:
A) its functional currency.
B) its presentation currency.
C) either functional or presentation currency.
D) none of the above.

Question

Quizplus · Accepted Answer

The transactions of a foreign company must be recorded in its functional currency, which is the currency of the primary economic environment in which it operates. This ensures that the financial statements reflect the economic reality of the company's operations. However, if the financial statements are presented to external users (such as shareholders or regulators) in a different currency, then the financial statements need to be translated into the presentation currency.

The Transactions of a Foreign Company Must Be Recorded In