When Determining the Functional Currency

question 77

Multiple Choice

When determining the functional currency,

• A)if the sales prices for the foreign entity's products are generally not responsive on a short-term basis to exchange rate changes, but are determined more by local competition and government regulation, the local currency should be the functional currency.
• B)if there is an active local market for the foreign entity's products the local currency should be the functional currency.
• C)if factor of production costs for the foreign entity are primarily, and on a continuing basis, costs for components obtained from the parent's country the functional currency should be the home currency.
• D)all of the above

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Definitions:

Menstruation

The monthly process in which the female body sheds the lining of the uterus, leading to bleeding through the vagina.

Stress Hormone

Hormones, such as cortisol, released into the body in response to stress, affecting various bodily functions including the immune response.

Epinephrine

A hormone and medication also known as adrenaline, involved in the body's fight-or-flight response.

Thyroxin

A hormone produced by the thyroid gland, crucial for regulating metabolism and influencing the growth and development of the body.