CASH-FLOW AND CASH BUDGET-DIFFERENCE
Income statement is called Cash-Flow Statement. It simply reveals the inflow and outflow of cash during the previous period. Such a statement can be prepared for a year, half year, a month, a week or for any other duration.
Its main function is to explain the causes of change in cash balances of the firm for two different dates.
Conceptually, there is no difference between a Cash-Flow statement and a cash budget, statements showing the sources and uses of cash can be prepared on the basis of historical data as well as on the basis of forecasts.
Statements prepared on the basis of historical data are called Cash-Flow statements while based on projected data for future are known as Cash Budget.
The Cash-Flow budget is used to project cash needs: to identify cash surpluses and to highlight possible critical points in the income and outgo of cash. Thus cash-flow statement is a useful technique of historical financial analysis while cash budgets is an indispensable technique of financial forecasting.