According to AASB 121 The Effects of Changes in Foreign Exchange Rates, the following statement, 'the currency that affects the economic wealth of the entity', provides a definition of?
A) functional currency;
B) local currency;
C) presentation currency;
D) foreign currency.

Question

Quizplus · Accepted Answer

The statement "the currency that affects the economic wealth of the entity" defines the functional currency. The functional currency is the currency of the primary economic environment in which the entity operates and generates cash flows.

According to AASB 121 the Effects of Changes in Foreign