Define: Deficit

UK Accounting Glossary

Definition: Deficit



What is the dictionary definition of Deficit?

Dictionary Definition


The property of being an amount by which something is less than expected or required.

  1. Deficiency in amount or quality; a falling short; lack.
  2. A situation wherein, or amount whereby, spending exceeds government revenue.

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Full Definition of Deficit


Deficit is an economic condition in which spending exceeds income. One example of a deficit would be a situation, in which a nation’s imports exceed its exports, creating a trade deficit. Another example is a company’s losses surpassing its profits. In such an event an organization is said to have a budget deficit. A prolonged state of deficit may be perilous to any entity, including a government. Namely, extensive periods of deficit may lead to inflation. When a deficit occurs, governments may turn to borrowing in order to correct the resulted imbalance. Borrowing to compensate for revenue shortfall is called deficit financing. Though deficit financing may initially stimulate the economy, it is a short term solution. For in perpetuity, deficit financing can substantially inflate interest rates.


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Deficit. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 20, 2020 https://payrollheaven.com/define/deficit/.
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Deficit. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/deficit/ (accessed: February 20, 2020).
American Psychological Association (APA):
Deficit. PayrollHeaven.com. Retrieved February 20, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/deficit/

Definition Sources


Definitions for Deficit are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 7th February 2020.