ACCA FR · Chapter 11 · Question 1 of 5
Under IAS 21, what is an entity's functional currency?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The currency of the primary economic environment in which the entity operates
Explanation
The functional currency is the currency of the primary economic environment in which the entity operates. It is usually the currency that mainly influences sales prices, labour and material costs. The presentation currency is the currency in which the financial statements are presented, and it can be different.
More Foreign currency transactions MCQs
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- Q5On 1 January Hobby Co (functional currency $) bought a machine for 600,000 kroner when the exchange rate was 6 kroner = $1, and paid for…