Which statement best defines a budget surplus?

• A. Income is less than expenses.
• B. Income exceeds expenses.
• C. Expenses exceed income.
• D. Income equals expenses.

Answer: (B)

A budget surplus occurs when you have money left after paying all expenses. It happens when income exceeds expenses, so you can save or invest the extra. For example, earning $3,500 but spending $3,000 leaves $500 as a surplus. If income is less than expenses, that’s a deficit; if expenses exceed income, that’s a deficit; if income equals expenses, the budget is balanced with no surplus. So the statement that income exceeds expenses best defines a budget surplus.