Final answer:
When a federal agency's revenues are greater than its costs, the Statement of Net Costs shows a surplus. A surplus indicates more revenue than expenses, while a deficit shows the opposite. It is distinct from reserve or liability, terms that relate to banking requirements and obligations respectively.
Step-by-step explanation:
When a federal agency has revenues in excess of costs, the bottom line of the Statement of Net Costs will appear as a surplus. A surplus in the context of a federal agency's statement indicates that the agency collected more in revenue than it spent on its costs and programs. On the other hand, a deficit would indicate that the government collected less in taxes than it needed to cover its expenditures. It is important to understand the terms deficit and surplus in the context of government financial statements as they have distinct meanings.
For clarification, a deficit is the annual budget shortfall between revenues and expenditures, not the total amount owed by the government for past borrowing. Additionally, reserves refer to the capital that banks must keep on hand and do not indicate an excess of revenues over expenses in government accounting. Lastly, a liability represents an obligation of the agency, and again is not indicative of a revenue surplus.