Which of the following statements regarding functional currency is FALSE?
A)Functional currency is the currency in which the company conducts its primary business activity.
B)Foreign currency exists when a company transacts in a currency other than its functional currency.
C)The currency of the country in which an entity normally operates is its functional currency.
D)Functional currency must be determined first before foreign currency transactions can be identified.

Question

Quizplus · Accepted Answer

The functional currency is not necessarily the currency of the country in which an entity operates; it is the currency of the primary economic environment in which the entity generates and expends cash.

Which of the Following Statements Regarding Functional Currency Is FALSE