Functional currency

Functional currency is the currency a business uses. When a business operates in different countries, different currencies might be used, but there needs to be one main currency that the business uses to calculate its profits and losses. That currency is called the functional currency. For example, if a company does business in the United States, Canada, and Mexico, then the functional currency for that company would be the US dollar. This means that all of the company's sales and expenses would be reported in US dollars.