Functional Currency
/ˈfʌŋkʃənəl ˈkɜːrənsi/
Definitions
- (n.) The currency of the primary economic environment in which an entity operates and generates cash flows, used for accounting and reporting purposes.
The company determined its functional currency to properly prepare its financial statements.
Forms
- functional currency
Related terms
See also
Commentary
Choosing the correct functional currency is crucial for consistent financial reporting and compliance with international accounting standards such as IAS 21.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.