The purpose of a cash budget is to do a few things.

| January 11, 2016


The purpose of a cash budget is to do a few things. It projects the cash receipts that is based on the estimated monthly sales and collections; also any other known cash inflow.  It also estimates the cash disbursements and the projected net cash flow (Rasmussen, 2015).

The income of the company or business is what is being forecasted. It differs from the income statement because the cash budget has the cash balance and receipts along with the total cash available and also the excess or deficiency of cash. This totals the ending cash balance (Rasmussen, 2015). The income statement itemizes what the company is doing. It shows what the company has done in the past to show where it currently stands (Business Dictionary, 2015).

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