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Simple English definitions for legal terms
surplus revenue
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A quick definition of surplus revenue:
Surplus revenue is the extra money a company makes after paying for all its expenses. This money can be saved for future use or used for special projects. Sometimes, the company's board of directors decides to set aside some of this money for a specific purpose, like buying new equipment or expanding the business. This money cannot be used to pay dividends to shareholders or for other purposes. Surplus revenue is also called appropriated retained earnings or surplus earnings.
A more thorough explanation:
Surplus revenue refers to the excess income or earnings that a company or organization has after all expenses and dividends have been paid. This surplus revenue can be used for various purposes, such as reinvesting in the business, paying off debt, or distributing to shareholders as dividends.
- A company earns $1 million in revenue and has $800,000 in expenses and dividends. The remaining $200,000 is considered surplus revenue.
- A non-profit organization receives $50,000 in donations and spends $40,000 on programs and services. The remaining $10,000 is considered surplus revenue.
These examples illustrate how surplus revenue is calculated by subtracting all expenses and dividends from total revenue. It is important for companies and organizations to manage their surplus revenue effectively to ensure long-term financial stability and growth.