accounting insolvency

Definition

A situation in accounting in which a company's liabilities exceed available assets on its balance sheet. Because the insolvency is determined by examining the balance sheet it is not considered regular insolvency, a situation in which a company is unable to pay off outstanding debt. When a company is found to have accounting insolvency it could be forced by creditors to restructure the business or declare bankruptcy.
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accounting information system (AIS) accounting interpretation