What Is a Company's Functional Currency

question 16

Multiple Choice

What is a company's functional currency?

• A) The currency of the primary economic environment in which it operates.
• B) The currency of the country where it has its headquarters.
• C) The currency in which it prepares its financial statements.
• D) The reporting currency of its parent for a subsidiary.
• E) The currency it chooses to designate as such.

Understand how to calculate inventory purchases required for future sales based on cost of goods sold percentages and inventory policies.

Analyze cash flow by calculating cash collections and disbursements based on sales, policies, and operational cycles.

Calculate the length of the cash cycle using turnover rates and payment periods.

Understand and calculate accounts payable and receivable periods using sales and cost of goods sold data.

---

Definitions:

Loan

A loan amount that requires repayment along with interest accrued.

Repay

To pay back or return money that has been borrowed or spent.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money they borrow from a lender.

Original Loan

The initial amount of money borrowed before any interest or fees are added.