1. _______ currency is defined as the currency of the primary economic environment in which the affiliate operates and in which it generates cash flows.

A. REPORTING

B. INDIRECT

C. FOREIGN SUBSIDIARY

D. FUNCTIONAL

2. Which of the following is not true regarding the Current Rate method?

A. It is used by a multinational corporation whose affiliate is operating in a hyperinflationary country.

B. It is the most prevalent method for translating foreign subsidiary's financial statements

C. Translation gains or losses are reported separately and accumulated in a separate equity account with a title such as cumulative translation adjustment.

D. Capital stock is translated using the exchange rate in existence on the balance sheet date.