International accounting standards define functional currency as:
A) the currency of the parent company.
B) the currency of the primary economic environment in which the subsidiary operates.
C) the currency of the primary economic environment in which the parent operates.
D) the currency used by a subsidiary for its financial reporting.

Question

Quizplus · Accepted Answer

Functional currency is defined by international accounting standards as the currency of the primary economic environment in which the subsidiary operates. It is the currency in which the subsidiary typically generates and expends cash. It is used to measure and record the financial transactions of the subsidiary, and to translate its financial statements into the reporting currency of the parent company.

International Accounting Standards Define Functional Currency As