Which of the Following Is an Indication That the Functional

question 30

Multiple Choice

Which of the following is an indication that the functional currency of a foreign operation is not the Canadian dollar?

• A) Only goods imported from the parent are sold by the subsidiary.
• B) The parent dictates the subsidiary's operating procedures.
• C) Cash to pay obligations is generated by local operations or borrowed from local lenders.
• D) Intercompany transactions account for a high proportion of the subsidiary's overall activities.

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Definitions:

Creditor

An entity or person to whom money is owed by the business.

Department Manager

An individual responsible for overseeing a specific department's operations, budget, and staff within an organization.

Direct Material

Raw materials that can be directly attributed to the production of a specific product, part of the variable costs of manufacturing.

Manufacturing Overhead

Manufacturing overhead encompasses all the indirect costs associated with producing goods, such as utilities, depreciation, and salaries of support staff, that cannot be directly traced to specific products.