Question

When is a cash flow budget a useful alternative to a comprehensive budget? Answer in approximately 250 words.

Answer 1

Cash flow budget is a useful alternative to a comprehensive budget when you just need to

know the actual cash for a specific period of time. Comprehensive budget covers all aspects

of your finances including nonrecurring expenses. But if you just need to know the cash on

hand and not what is projected for the future, cash flow budget is more useful. Cash flow

budget is cash inflows and outflows for an individual for a specific period of time. Cash

budgets are often used to assess whether the individual has sufficient cash to fulfill regular

daily spending and whether too much cash is being left unused. Creating a cash budget is a

good method for determining where your cash is regularly being spent. Knowing what is

regularly being spent can help someone determine where cuts can be made to save more or

add more money to cut down on a regular bill.