The excess of quick assets such as cash and investments over legal and demand liabilities is referred to as what?

The term describing the excess of quick assets, such as cash and investments, over legal and demand liabilities is known as surplus. In municipal finance, this concept hinges on the ability of a municipality to meet its short-term obligations while maintaining sufficient liquidity.

Surplus indicates that the quick assets available can cover the legal and demand liabilities, ensuring financial stability and the capacity to respond to immediate financial needs. This distinction is crucial for effective financial management, especially in governmental accounting, as it reflects the entity’s short-term financial health.

In contrast, while equity pertains to ownership and capital structure, it does not directly relate to the immediate liquidity or the relationship between quick assets and liabilities. Revenue, while essential for the operations of a municipality, does not refer specifically to the balance sheet assessment of quick assets compared to liabilities. A deficit indicates that liabilities exceed assets, which would not apply in this context. Therefore, surplus is the most fitting term for this situation.