Asked by Chantal Taylor on Jun 23, 2024
Verified
For a company that has A$ as its functional currency, which of the following is not a foreign currency transaction?
A) goods sold at prices denominated in UK pounds
B) equipment sold at prices denominated in Japanese Yen.
C) inventory sold to a customer in Hong Kong who pays in A$.
D) borrowing funds where amounts are payable in NZ$.
Functional Currency
The currency of the primary economic environment in which an entity operates, typically used in its financial reporting.
Foreign Currency Transaction
A transaction that is denominated or requires settlement in a foreign currency.
Denominated
Indicates the unit of currency in which a financial transaction or instrument is specified.
- Familiarize yourself with the theory behind monetary and non-monetary entities in the realm of foreign exchange activities.
Verified Answer
JG
jefeson garciaJun 29, 2024
Final Answer :
C
Explanation :
Since A$ is the functional currency of the company, any transaction involving A$ is not considered a foreign currency transaction. Therefore, option C (selling inventory to a customer in Hong Kong who pays in A$) is not a foreign currency transaction. Options A, B, and D involve currency other than the functional currency of the company and are considered foreign currency transactions.
Learning Objectives
- Familiarize yourself with the theory behind monetary and non-monetary entities in the realm of foreign exchange activities.
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