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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 Preview

    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 ...

    Solution Summary

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