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:

First-Line Supervisor

A managerial position that serves as the initial level of management, directly overseeing and managing the work of entry-level or operational employees.

Productivity

The measure of efficiency of a person, machine, factory, or system in converting inputs into useful outputs.

High-Performing

Describes individuals, teams, or organizations that consistently achieve outstanding results relative to their peers or objectives.

Low-Performing

Referring to an individual or entity that fails to meet expected or standard levels of productivity or achievement.