Difference between cash budget and cash flow forecast
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A cash budget is futuristic in approach. It is prepared on the basis of future plan of action & in advance. On the other hand, a cash flow statement is prepared on the basis of past data.
A cash budget relates with the objectives that are to be achieved & is a plan for inflows of cash & outflows of cash. Whereas, cash flow statement does a post mortem analysis of actual inflows of cash & outflows of cash.
The cash budget is usually prepared for a short period (may be a week, fortnight, month or quarter). For a long period also (say, a year), a cash budget may be prepared but division into short sub-budget periods is made (say, a month or quarter). Depending upon the nature of the business of the firm & how accurately the estimates can be made; the time span which will be covered by the cash budget will vary from one firm to another firm. On the other hand, a relatively longer period, usually an accounting year, is covered by a cash flow statement & it is not divided into sub-periods.
A cash budget is a tool used for budgeting & controlling of cash. While, cash flow statement, for the past accounting year, analyses the working of the concern.
A cash budget, for the purpose of judicious forecasting, requires only the previous data. While, preparation of cash flow statement is made from the accounting data at the beginning of an accounting year & at the end of an accounting year.
Usually, the purpose of the management only is served by a cash budget whereas the purposes of the management along with the external parties are served by the cash flow statement.