A budget surplus occurs when an entity, such as a government or organization, earns more revenue than it spends over a specific period. This means that the total income exceeds the total expenses, allowing the entity to save or invest the extra funds. A budget surplus can be a sign of good financial health, as it indicates that the entity is managing its finances effectively. Governments often use a budget surplus to pay down debt, invest in public services, or save for future needs. For example, a country like Canada may experience a budget surplus, allowing it to allocate funds toward infrastructure projects or social programs, ultimately benefiting its citizens.