Cash Budget : The Revenue And Expenses During The Fiscal Year

2237 Words Dec 14th, 2016 9 Pages
Question 1.

The operating budget includes the revenues and expenses during the fiscal year, while the cash budget focuses on the coming year. The operating budget is usually more in depth. The cash budget would let the people know if they have enough money on hand or will there be able to collect the money needed during the upcoming year. The focus of a cash budget would be to estimate the incoming revenues the company has coming in the upcoming year of the budget. It would allow organizations to know when cash was becoming available to the company.

Both the operating and cash budgets estimate different types of revenues and expenses or expenditures. So, if I run a nonprofit organization, a lot of my revenue would be coming from donations, grants, and government aid. My expenditures and expenses would include the programs my nonprofit runs, salaries of my employees, and supplies. The cash budget would let me know when cash would be available for investment and when I will become short of cash and let me arrange something in order to alleviate the stress of a cash shortage.

Nonprofit managers who are running small nonprofits, it would be more beneficial to use a cash budget. This is because for a cash budget the organization can see how much money it has to start off with at the beginning of the year. All of the expenses, expenditures, and revenues are listed out and it allows the manager to expect for cash receipts and payments. The cash budget can plan for this and…

Related Documents