The Functional Currency of an Entity

question 49

Multiple Choice

The functional currency of an entity:

• A) never change once determined
• B) must be assessed and changed annually.
• C) can change if there is a change in underlying transactions, events and conditions which determine the functional currency.
• D) can change as a consequence of the foreign currency transactions that are undertaken by the parent entity.
• E) can change as a result of a change in management.

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Definitions:

Market Price

The current value at which an asset or service can be bought or sold, determined by supply and demand forces in the open market.

Break Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Short Run

A period in which at least one factor of production is fixed and cannot be fully adjusted.

AVC Curve

The average variable cost curve, which shows how the unit variable cost of production changes with the level of output.