Legal Definitions - surplus

Surplus refers to an amount that remains after all necessary expenses, debts, or requirements have been met. In a financial or legal context, it signifies an excess of assets, revenue, or funds over liabilities, costs, or obligations. It represents a positive balance, indicating that more has been received or accumulated than was spent or owed.

• Example 1: Non-Profit Organization's Annual Budget

  A local animal shelter relies on donations and grants to cover its operational costs, including food, veterinary care, and staff salaries. At the end of its fiscal year, after paying all its bills and fulfilling all its commitments, the shelter finds it has $35,000 remaining in its bank account.

  This $35,000 is a surplus because it is the amount of money left over after all the organization's financial obligations and planned expenditures for the year have been covered. This excess can then be carried over to the next year, invested in new facilities, or allocated to expand its outreach programs.

• Example 2: Sale of a Dissolved Partnership's Assets

  Two partners decide to dissolve their small consulting firm. After selling off all office equipment, intellectual property, and collecting outstanding client payments, the total assets amount to $150,000. The firm still owes $100,000 to creditors and has $20,000 in outstanding taxes.

  Once the $100,000 in creditor debts and $20,000 in taxes are paid, $30,000 remains ($150,000 - $100,000 - $20,000). This $30,000 is the surplus, which can then be distributed to the partners according to their partnership agreement, as it represents the funds remaining after all the firm's liabilities have been satisfied.

• Example 3: International Trade Balance

  Country A exports goods and services worth $800 billion to other nations in a given year. During the same period, Country A imports goods and services worth $720 billion from other nations.

  The difference of $80 billion ($800 billion exports - $720 billion imports) represents a trade surplus for Country A. This indicates that the country sold more goods and services to the rest of the world than it bought, resulting in a net inflow of foreign currency and a positive balance in its international trade accounts.