The distinction between cashflow statement and cash budget is given below:
Difference # Cashflow Statement:
1. The cashflow statement shows the cash inflows and cash outflows relating to firm’s operating, investing and financing activities.
2. The preparation of cashflow statement is done as a postmortem exercise of the past events.
3. Cashflow statement starts with the opening balance of cash and cash equivalents for the reporting period and ends with closing balance of cash and cash equivalents at the end of the reporting period.
4. The cashflow statement is used as a tool of analysis and determine the likely flow of cash. It discloses the increase or decrease in cash and cash equivalents and the reasons therefor.
5. Basically, the cashflow statement is prepared for a financial accounting period.
6. The cashflow statement is prepared as per the provisions of Accounting Standard-3 (Revised).
7. Cashflow statement is prepared for the utility of external agencies like shareholders, financial institutions, investors, government etc.
Difference # Cash Budget:
1. All expected cash receipts and estimated cash payments are incorporated into cash budget to ascertain the excess of receipts over payments or any shortage of cash for the period for which cash budget is prepared.
2. Cash budget is prepared for the forthcoming period as a planning exercise.
3. Cash budget starts with the opening balance of cash in hand and at bank at the beginning of the proposed period and ends with closing balance of cash in hand and at bank at the end of the period.
4. The surplus cash receipts may be planned for profitable investment in marketable securities and if any shortage of cash is expected the management may take appropriate steps to tideover the shortage of cash situations.
5. The cash budget may be prepared for a month, quarter, half year or annual.
6. There is no specific format prescribed for preparation of cash budget.
7. Cash budget is prepared as a part of planning exercise for the utility of internal management.