Operating surplus
Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Operating surplus is the part of value added left after wages are paid to workers. It is then divided among the other factors of production as rent (for land), interest (for capital) and profit (for the entrepreneur). Together, wages and operating surplus make up the income created by production. This split shows how much of value added goes to labour and how much goes to owners of land, capital and enterprise.
Example
A textile firm buys cotton for ₹50 and sells cloth for ₹200, so its value added is ₹150. It pays ₹60 in wages. The remaining ₹90 is its operating surplus. In this example, all of it is profit.
Don't confuse with
- Profit: profit is only one part of operating surplus. Operating surplus also includes rent and interest.
Related concepts
- Value added
- Monetary value
- Value added method
- Gross Value Added
- Net value added
- Inventory
- Change in inventories
- Planned change in inventories
- Unplanned change in inventories
- Fixed business investment