2A4A.2 A FIRM’S FUNCTIONAL CURRENCY SHOULD BE A. SELECTED ON THE BAS...

89.

CSO: 2A4a

LOS: 2A4a.2

A firm’s functional currency should be

a.

selected on the basis of several economic factors including cash flow, sales price,

and financing indicators.

b.

the currency of the foreign environment in which the firm primarily generates and

expends cash.

c.

selected on the basis of cost-benefit analysis and ease of preparing consolidated

financial statements.

d.

the currency of the parent organization as the firm operates as an extension of the

parent’s operations.