ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What does a budget show you? Detailed categories on your budget will help you make better spending decisions. A budget says what will happen with your money, while a cash-flow statement shows what already happened.

Detailed explanation-2: -A cash flow budget estimates your business’s cash flow over a specific time period. You can use the information to see if you have enough cash coming in to maintain regular operations over the given timeframe. It can also give insight into how to allocate your budget effectively.

Detailed explanation-3: -A budget is used to plan ahead for the organisation or a project, whereas the cashflow forecast is used to manage cash tightly eg. to ensure the bank account is not overdrawn.

Detailed explanation-4: -A budget is a plan that shows you how you can spend your money every month. Making a budget can help you make sure you do not run out of money each month. A budget also will help you save money for your goals or for emergencies.

Detailed explanation-5: -A budget differs from cash flow statement because a budget both projects how you expect to allocate the cash flow and records how the cash flow was actually spent at the end of the month.