The currency of the primary economic environment in which the firm operates is the
A) functional currency.
B) reporting currency.
C) historical currency.
D) base currency.

Question

Quizplus · Accepted Answer

The functional currency is the currency of the primary economic environment in which the firm operates. It is the currency that is most relevant to measuring the financial results of the firm's operations. The reporting currency is the currency in which the firm prepares its financial statements, which may or may not be the same as the functional currency. The historical currency is the currency in which a transaction or event initially occurred, but it may not be relevant to the firm's current operations. The base currency is a term used in foreign exchange trading, referring to the currency against which other currencies are measured, but it does not necessarily relate to the firm's primary economic environment.

The Currency of the Primary Economic Environment in Which the Firm