Compare and contrast an operating budget with a cash flow budget.

Operating a business requires proper attention to its finances. Controlling expenses and balancing them against income is accomplished through the budgeting process. Businesses primarily use the cash budget or the operating budget format. Preparing a budget is necessary if a company's expansion is reliant upon financing. Banks and other lending institutions determine a business’ bottom line through investigation of its cash or operating budget. A well-prepared, accurate budget assessment of the business’ success provides the basis for future expansion plans.

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