What is considered a budget surplus?

A budget surplus occurs when revenues exceed expenditures, meaning that an organization has more income than it has spent during a particular period. This financial situation indicates a positive cash flow and can provide an organization with opportunities for reinvestment, savings, or to finance future projects without incurring additional debt.

When analyzing the other options provided, the first option describes a balanced budget, where expenses and revenues are equal, which means there is neither a surplus nor a deficit. The third option refers to cost reduction, which, while beneficial in managing expenses, does not inherently define a budget surplus without considering overall revenues. The fourth option explains a situation where profits match capital costs, which is a distinct concept relating to profitability rather than the overall balance of revenues and expenditures. Thus, the clarity and definition of a budget surplus are best captured in the understanding that it is specifically about revenues exceeding expenditures.