The Functional Currency Approach Adopted by FASB 52 Requires

question 42

Multiple Choice

The functional currency approach adopted by FASB 52 requires:

• A)​separate statements be maintained by the domestic parent company and the foreign branch both in their own currencies
• B)​separate statements be maintained by the domestic parent company and the foreign branch with the foreign branch translated into the functional currency
• C)​results from foreign currency changes to be ignored
• D)​a focus on whether the domestic reporting entity's cash flows will be indirectly or directly affected by changes in the exchange rates of the foreign entity's currency

---

Definitions:

Being In Control

The perception or reality of an individual having the power or management over situations, objects, or people.

Run Of Eight

A specific sequence in process control in which eight consecutive points fall on one side of the mean or another indicating a potential non-random pattern.

Statistical Control

The process of adjusting for the effects of confounding variables by including them as covariates in statistical models, to isolate the true relationship between the primary independent and dependent variables.

Center Line

In statistical process control charts, this is the line that represents the average or mean of the data points being monitored.