Which type of account is most affected by currency translation adjustments?

Currency translation adjustments primarily impact equity accounts, particularly when an entity operates in multiple currencies and consolidates financial statements from foreign operations. This process involves translating the financial statements of foreign subsidiaries into the reporting currency, which can result in gains or losses due to fluctuations in exchange rates.

These adjustments are recorded in a separate component of equity, often referred to as the "foreign currency translation reserve," and reflect the cumulative effects of changes in exchange rates on the value of foreign operations.

In contrast, while asset and liability accounts are also influenced by currency fluctuations during the translation process, the adjustments themselves are not recognized directly in the profit and loss statement but are instead typically included in equity. Revenue accounts, being part of the income statement, do not directly deal with currency translation adjustments, as they reflect performance over a period rather than the cumulative effect of exchange rates. Thus, equity accounts are the most directly affected by currency translation adjustments.