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Why is the term profit used as opposed to surplus?

What is a surplus and how is it calculated?

  • A surplus isn’t that different to a profit and is calculated in very much the same way by adding up all the expenses incurred during the year and reducing that from the total revenue earned.

What are the two types of economic surpluses?

  • There are two types of economic surplus: consumer surplus and producer surplus. A consumer surplus occurs when the price for a product or service is lower than the highest price a consumer would willingly pay.

What is a distributable surplus under Division 7A?

  • Distributable surplus The total of all deemed dividends that a private company is taken to pay under Division 7A is limited to its distributable surplus for that income year. The amount of a private company's distributable surplus for its income year is calculated according to the distributable surplus formula. Written statement.

image-Why is the term profit used as opposed to surplus?
image-Why is the term profit used as opposed to surplus?
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