What is the difference between a budget surplus and a deficit?

What is the difference between a budget surplus and a deficit?

• A. A surplus occurs when expenses exceed income.
• B. A surplus occurs when income exceeds expenses.
• C. A deficit occurs when expenses are equal to income.
• D. A deficit occurs when income exceeds expenses.

Answer: (B)

A budget surplus occurs when income exceeds expenses, which means that the individual or organization has more revenue coming in than it is spending. This surplus can be saved, invested, or used to pay down debt, providing financial flexibility and security. Understanding this concept is crucial for personal financial management, as maintaining a surplus can contribute to long-term financial stability. In contrast, a budget deficit occurs when expenses exceed income, indicating that the spender is using more money than they are bringing in, which can lead to increased debt and financial strain. This distinction underscores the importance of managing finances carefully to avoid deficits while aiming for surpluses whenever possible.

A budget surplus occurs when income exceeds expenses, which means that the individual or organization has more revenue coming in than it is spending. This surplus can be saved, invested, or used to pay down debt, providing financial flexibility and security. Understanding this concept is crucial for personal financial management, as maintaining a surplus can contribute to long-term financial stability.

In contrast, a budget deficit occurs when expenses exceed income, indicating that the spender is using more money than they are bringing in, which can lead to increased debt and financial strain. This distinction underscores the importance of managing finances carefully to avoid deficits while aiming for surpluses whenever possible.