Functional Currency

Functional Currency

The primary type of money that a company uses in its business activities. Often a company's functional currency is the same as that of the nation in which it is headquartered, though this is not necessarily the case. The functional currency is most relevant for multinational corporations that conduct business in multiple currencies.

For example, a Canadian company with the bulk of its operations in the United States would consider the U.S. dollar its functional currency, even if financial figures on its balance sheet and income statement are expressed in terms of Canadian Dollars.

It is often very difficult to ascertain overall business performance when a variety of currencies are involved, however. Therefore, both U.S. GAAP and IAS outline procedures for how these corporations should convert foreign currency transactions into the functional currency for reporting purposes. Foreign exchange is typically not converted in real time, however, which can result in losses and gains due to exchange rate fluctuations.


Investment dictionary. . 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • Functional currency — is the monetary unit of account of the principal economic environment in which an economic entity operates.Statement of Financial Standards No. 52 (SFAS 52) is the primary source of GAAP for translation of foreign currency financial statements.… …   Wikipedia

  • Functional currency — As defined by FASB No. 52, an affiliate s functional currency is the currency of the primary economic environment in which the affiliate generates and expends cash. The New York Times Financial Glossary …   Financial and business terms

  • functional currency — As defined by FASB No. 52, an affiliate s functional currency is the currency of the primary economic environment in which the affiliate generates and expends cash. Bloomberg Financial Dictionary …   Financial and business terms

  • functional currency — A *currency used in the primary location of an individual or organization, which is normally adopted for *financial reporting purposes. For example, a * multinational corporation based in the United States would usually adopt the U.S. dollar as… …   Auditor's dictionary

  • functional currency — funkcinė valiuta statusas T sritis Gynyba apibrėžtis Valiuta, naudojama organizacijos operacijoms registruoti ir apskaitai vykdyti. atitikmenys: angl. functional currency šaltinis NATO mokymų ir pratybų finansavimo terminų žodynas AAP 43(1), 2009 …   Lithuanian dictionary (lietuvių žodynas)

  • functional currency — The currency of the economic environment in which a business operates. It is usually, although not necessarily, the currency in which the business will produce its audited accounts …   Accounting dictionary

  • currency — A system of *money that is widely accepted as a medium of exchange in a specific country or region. Gold is often considered to be an international currency, owing to its acceptability throughout the world. See also *hard currency, *soft currency …   Auditor's dictionary

  • Функциональная валюта (FUNCTIONAL CURRENCY)  — Валюта основной экономической среды, в которой функционирует хозяйственная единица; обычно это валюта, в которой предприятие получает и расходует денежные средства …   Словарь терминов по управленческому учету

  • Base currency — In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is named the quote currency, counter currency or terms currency. Exchange rates are quoted in per unit of the base currency. Note that FX …   Wikipedia

  • Foreign currency transaction gains and losses —   Gains or losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency (for example, a U.S. enterprise may borrow Swiss francs or a French subsidiary may have a receivable …   Energy terms

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”