Why Do Nonprofit Organizations Use A Cash Budget?

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,
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Workload level is used to refer to the volume of goods or services that the organization will provide (85). The flexible budget works as an aid for managers to budget the different workload levels. The budget adjusts based on the revenue coming into the organization and the workload levels. Rather than using fixed numbers, a flexible budget focuses on an output measure and shows if something needs increased or decreased. The flexible budget can help management make adjustments according to the budget. It gives alternatives for potential change in

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