Alpha Ltd is an Australian company, the currency of its principal economic environment is UK£ and its financial statements are presented in ¥ the functional currency of its parent entity.
When considering foreign currency transactions and the preparation of financial reports of entities that engaged in transactions denominated in foreign currencies, four currency classifications are adopted:
I $\quad$ the presentation currency
II $\quad$the domestic currency
III$\quad$the functional currency
IV$\quad$foreign currencies
-For Alpha Ltd its functional currency is:
A)A$
B)¥
C)UK£
D)US$

Question

Quizplus · Accepted Answer

The functional currency is the currency of the primary economic environment in which the entity operates. For Alpha Ltd, since its principal economic environment is in the UK, its functional currency is the UK£ (British Pound Sterling).

Alpha Ltd Is an Australian Company, the Currency of Its \quad

Alpha Ltd Is an Australian Company, the Currency of Its $\quad$