- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 12. Multinational Operations
- Subject 2. Role of the Functional Currency
CFA Practice Question
Which of the following is NOT an indicator that must be assessed in determining an entity's functional currency?
B. Expenses.
C. Cash flows.
D. Retained earnings.
A. Financing.
B. Expenses.
C. Cash flows.
D. Retained earnings.
Correct Answer: D
Letters A through C describe three of the six indicators that must be assessed in order to determine an entity's functional currency. The three remaining indicators are sales prices, sales markets and intercompany transactions and arrangements. "Retained earnings" has no meaning in this context.
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