A cash budget is one of the most important budgets prepared by a business concern as every transaction directly or indirectly deals with cash. It shows the estimate of cash receipts and cash payments from all sources over a specific period. The cash flow statement is focused on cash accounting, whereas there are two forms of accounting, accrual, and cash.
The difference between cash budget Cash budget and cash flow statement are as follows –
Cash budget
- Cash budget is a detailed plan showing how cash resources will be acquired and used over a specific time period.
- It shows how much cash is expected to come and how much cash is expected to go out.
- The cash budget is quite simple.
- Cash budget consists the firm must have cash on a current basis to pay its employees and suppliers and to meet its others cash needs.
- Cash Budget is usually prepared for a short period, viz., daily, weekly, fortnightly, monthly, half-yearly etc.
Cash flow statement
- Cash flow statement is a detailed report or document showing how cash resources will be acquired and used over a specific time period.
- An external financial statement that describes changes in cash between two balance sheet dates.
- Cash flow statement is a primary external statement.
- It includes the source of cash during the year and shows how it was used.
- Cash Flow Statement is prepared for a long period, usually yearly.
