Cash is required not only for paying daily expenditure but lacking cash, we cannot purchase any fixed assets too. Good planning of cash will make us simple to hold our expenditures and appropriate spending. The plan that helps us to utilize cash systematic way is termed as cash budget. Method of making cash budget is termed as cash budgeting. In cash budgeting, we add up all estimated cash that we receive from others in future and remove all estimated cash that we have to pay for eliminating our liabilities. Its difference will exhibits estimated cash that will be our pocket. Subsequent to spending of year, we compare this cash budget with real receipt and payments. When our real cash receipt is more than budgeted cash receipt then this will be our positive position. On other hand, when budget cash receipt is more than actual, then this will be adverse position. We can too assess budgeted payments with real payment.
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