The "Functional Currency" Is Defined in FASB 52 as

question 25

Multiple Choice

The "functional currency" is defined in FASB 52 as

• A)the currency of the primary economic environment in which the entity operates.
• B)the currency in which the MNC prepares its consolidated financial statements.
• C)a currency that is not the parent firm's home country currency.
• D)both b and c

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Definitions:

Absorption Costing

An approach to costing that covers all expenses involved in manufacturing, including direct materials, direct labor, and all overhead costs, both variable and fixed, in the product price.

Year 2

The second year in a series, timeline, or sequence, often referring to financial or operational periods.

Variable Costing

An accounting method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead.

Net Operating Income

A financial metric that calculates how much profit a business generates from its regular operational activities, excluding non-operating income and expenses.