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AAT Level 2 Accounting Costing Accounting Finance Computerised
 
Modules
Working Effectively in Accounts & Finance
   

Efficiency Solvency

Efficiency

  • Information provided by the accounts dept must be
    -Complete
    -Accurate
    -On time
  • This will contribute to the efficiency of the organisation.
  • Quality Information – Accurate, Complete, Cost beneficial, User Targeted, Relevant & Reliable, Authorised, Timely, Easy to access [ACCURATE]

Solvency

  • Solvency is also an important objective of an organisation
  • Solvency means the ability to pay debts when they fall due
  • Insolvent means you cannot pay your debts
  • An insolvent individual becomes bankrupt
  • An insolvent company goes into administration then liquidation resulting in court action, loss of jobs, closure of business, unpaid creditors
  • To remain solvent a company must
  • Monitor both present and expected money coming in and out of the business
  • This can be by means of cash flow forecast/cash budget

Working Capital

  • The surplus of money in or money shortly due in (money realised) is referred to as working capital
  • Working capital can be calculated as Current Assets – Current Liabilities
   
 
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