The Functional Currency Approach Adopted by FASB 52 Requires

question 42

Multiple Choice

The functional currency approach adopted by FASB 52 requires:

• A)​separate statements be maintained by the domestic parent company and the foreign branch both in their own currencies
• B)​separate statements be maintained by the domestic parent company and the foreign branch with the foreign branch translated into the functional currency
• C)​results from foreign currency changes to be ignored
• D)​a focus on whether the domestic reporting entity's cash flows will be indirectly or directly affected by changes in the exchange rates of the foreign entity's currency

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Definitions:

Moral Reasoning

The process by which individuals think through ethical issues and come to a conclusion or judgment.

Conventional

Adhering to accepted standards or practices; typical or expected behavior or way of doing things.

Kohlberg

Refers to Lawrence Kohlberg, an American psychologist best known for his theory of stages of moral development.

Stealing Behavior

The act of taking someone else’s property without permission or legal right and without intending to return it, recognized as a violation of social norms and laws.