What ismeant pany sfunctional currency? AItisthe currency inthe country where its financial statements are distributed. BItisthe currency ofits primary cash flows. CItisthe currency used inall foreign transactions. DItisthe currency ofany country inwhich pany does 10percent ormore ofits transactions. The correct answer was B. Acompany ’sfunctional currency isthe one primarily used inits cash flows. When acompany operates inmore than one currency, itshould look atthe currency inwhich itmakes most ofits sales, obtains most ofits financing, pays most ofits employees, and buys most ofits materials to determine the functional currency. 2of7 Question pany has ownership ofasubsidiary located inJapan. Currently, the pany ispreparing consolidated financial statements. Which of the following statements istrue? AThe accounts ofthe pany must be translated into USdollars ifboth the parent and the subsidiary have the same functional currency. BThe accounts ofthe pany must betranslated into US dollars ifthe subsidiary has adifferent functional currency from the parent. CThe accounts ofthe pany must be translated into USdollars regardless ofthe identity ofthe functional currencies. DThe accounts ofthe pany must be translated into USdollars but only ifthe pany holds 100 percent interest inthe subsidiary. Ooops! answer to question 2 is incorrect... The correct answer was B. Translation isaprelim
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