What happens when spending exceeds income?

When spending exceeds income, it may lead to debt accumulation because individuals may borrow money to make up for the deficit between their expenditures and their available funds. This borrowing can come in various forms, such as credit card debt, personal loans, or other financial obligations. Over time, failing to balance income and expenses can create a cycle of increasing debt, as individuals may continue to rely on borrowed funds to maintain their lifestyle or cover daily expenses. This situation highlights the importance of budgeting and managing finances to ensure that spending does not exceed income, thereby avoiding the pitfalls of debt.

The other options do not accurately describe the consequences of excessive spending compared to income. A surplus of funds would occur only when income exceeds spending, living lavishly is an unsustainable lifestyle if it relies on borrowed money, and having high credit scores typically requires responsible financial behavior, not overspending. Thus, the most accurate outcome of spending exceeding income is indeed debt accumulation.