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Simple English definitions for legal terms
surplus
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A quick definition of surplus:
Surplus means having more than what is needed or required. It can refer to the extra amount of money or resources left over after all expenses have been paid. For example, if you have $10 and only need to spend $8, you have a surplus of $2. Surplus can also refer to the extra value of assets or earnings that a company has beyond what is necessary to cover its debts and obligations. This extra value can be used for future investments or distributed to shareholders as dividends.
A more thorough explanation:
Surplus refers to the excess or leftover amount of something. It can be used in different contexts:
- Financial surplus: This refers to the excess of money received over money spent. For example, if a company earns $100,000 in revenue but only spends $80,000 on expenses, it has a surplus of $20,000.
- Partnership surplus: When a partnership is dissolved and all debts are paid, any remaining funds are called surplus.
- Corporate surplus: This refers to a corporation's net worth beyond the par value of its capital stock. For example, if a company's assets are worth $1 million and its liabilities are $500,000, its surplus is $500,000.
These examples illustrate how surplus refers to the extra or leftover amount of something, whether it's money, assets, or funds.