Jan 08, 2016 01:13 PM IST | Source: Moneycontrol.com

What is a revenue deficit?

A revenue deficit happens when the net amount received (that is revenues less expenditures)

A revenue deficit happens when the net amount received (that is revenues less expenditures) falls short of the projected net amount to be received. This occurs when the actual amount of revenue received and/or the actual amount of expenditures do not correspond with predicted revenue and expenditure figures. This is the opposite of a revenue surplus, which occurs when the actual amount exceeds the projected amount.

For example, consider an organization with budgeted revenue of USD 325,000 and budgeted expenditures of USD 200,000, which equates to a net amount of USD 125,000. During the fiscal year, the organization's total revenue is actually USD 300,000, while its total expenditure is USD 195,000. The net amount received by the organization is USD 105,000, which is USD 20,000 less than the projected receipt of USD 125,000.

Therefore, although the organization generated a positive net amount of proceeds, it fell short of the projected amount, creating a revenue deficit.

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