Indicators Pointing Towards the Local Overseas Currency as the Functional

question 12

Multiple Choice

Indicators pointing towards the local overseas currency as the functional currency include:
I. Parent's cash flows are directly affected on a current basis.
II. Production costs are determined primarily by local conditions.
III. Sales prices are primarily responsive to exchange rate changes in the short-term.
IV. Cash flows are primarily in the local currency and do not affect the parent's cash flows.

• A) II and IV only.
• B) I and III only.
• C) I, III and IV only.
• D) I, II and IV only.

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Definitions:

Larger Orders

Purchases made in quantities significantly above the normal order size, often resulting in volume discounts or special handling.

Organizational Buying Behavior

Refers to the purchasing behavior and decision-making process of organizations, focusing on how companies acquire products and services for operational, manufacturing, or reselling purposes.

Fewer Customers

Fewer customers indicates a reduction in the number of individuals or entities purchasing from a business, which can impact sales and profitability.

Nonprofit Organization

An entity that operates for the promotion of a public or social benefit rather than for the profit or gain of its owners or investors.