According to AASB 121/IAS 21 the Effects of Changes in Foreign

question 10

Multiple Choice

According to AASB 121/IAS 21 The Effects of Changes in Foreign Exchange Rates, the key economic factor to consider in determining an entity's functional currency is:

• A) which economic environment has the higher exchange rate.
• B) in which economic environment does the company incur the highest proportion of its production costs.
• C) which economic environment an entity primarily generates and spends cash.
• D) none of the above.

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Definitions:

United States

A country in North America consisting of 50 states and a federal district, known for its large size and diverse population.

Russia

A country in Eastern Europe and Northern Asia, known for its extensive territory, rich history, and cultural contributions.

Cultural Differences

Variations in the norms, values, beliefs, and practices between different groups, societies, or organizations, influencing behaviors and expectations.

Individualism

An ideology that places higher value on personal freedom rather than being governed by communal or state regulations.