ExpertEasy2 marksMultiple Choice
ACCA · Question 31 · Performance Measurement
Section A
EduCare NGO is audited on 'Value for Money' (the 3 Es). They recently negotiated a 15% discount on bulk purchases of textbooks without compromising the quality of the books. Which of the 3 Es does this achievement primarily demonstrate?
Section A
EduCare NGO is audited on 'Value for Money' (the 3 Es). They recently negotiated a 15% discount on bulk purchases of textbooks without compromising the quality of the books. Which of the 3 Es does this achievement primarily demonstrate?
Answer options:
A.
Economy
B.
Efficiency
C.
Effectiveness
D.
Equity
How to approach this question
Match the action (getting inputs cheaper) to the correct 'E'. Economy = Input cost. Efficiency = Input/Output ratio. Effectiveness = Output/Objective achievement.
Full Answer
A.Economy✓ Correct
In Value for Money (VFM) analysis, Economy means obtaining inputs of the appropriate quality at the lowest price. Negotiating a discount on textbooks is a perfect example of Economy.
Common mistakes
Confusing Economy with Efficiency.
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