The currency that an entity uses to record and measure its transactions. A functional currency is used to present the relevant financial information about an entity’s operations and activities in its accounting records (including financial statements). Typically, this currency is the currency of the country in which the entity operates. In general, it is the monetary unit of account of the primary economic environment where the entity carries out its transactions and conducts its business with the other economic agents within that environment.
The currency is not functional currency to an entity is known as a foreign currency.
In multiple context, a functional currency may be also referred to as a presentation currency, base currency, primary currency, etc.
Comments