What’s in a Name?
Will not the good man, who says whatever he says with a view to the best, speak with a reference to some standard and not at random?1
“What’s in a name?” For example, you could research the term reporting currency used in one of the financial reporting standards. You could explore the etymology of the term, perhaps gaining an in-depth understanding of its origin and how it has changed over time. Still, the fundamental economic substance underlying the word would retain its properties. Reporting currency is just a name. The concepts behind the term are more significant. As we will read in this chapter, the term reporting currency best demonstrates this point, given that the concepts underlying the term remain while the term itself has become obsolete.
When learning the currency nomenclature, and in order to report effectively in multiple currencies, you should always maintain focus on the fundamental economics. The economics act as a guide and touchstone. The names remain important, so always know and use the terminology correctly. Understand the specific definition of each term and keep your knowledge current. If you get lost in words, however, return to the economic substance, the essence, and the definition to guide your thought.
Two accounting standards dominate the nomenclature for foreign currency financial reporting:
1. International Accounting Standard 21 (IAS 21)—The Effects of Changes in Foreign Exchange Rates.
2. Accounting ...