What Is a Company's Functional Currency

question 6

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.

---

Definitions:

Deferred Tax Asset

A tax reduction or benefit that arises due to temporary differences between the book value and tax value of assets and liabilities, which can be used to offset future tax liabilities.

Income Taxes Payable

The amount of income tax a company owes to the government but has not yet paid, usually accumulated over a financial period.

Income Tax Expense

The amount of money a company owes in taxes based on its taxable income.

Long-term Debt

Debt obligations with a maturity of more than one year, utilized to finance a company's operations or expansions over a longer period.