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Contrast operating and cash budgets. Why are they needed?

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What is the relationship between an operating and a cash budget?

Why is it important for an organization to prepare a cash budget?

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Solution Summary

Answer explains in everyday language suitable for a novice to absorb.

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Operating budget: Shows planned revenues and planned expenses.
Cash budget: Shows planned collections (inflows) and payments (outflows).

The settlement of transactions (when you collect and when you pay) can differ ...

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Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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