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The Difference Between An Operating Budget And Capital Budget

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Running Head: Difference between an operating budget and capital budget 1
The difference between an operating budget and capital budget
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Running Head: Difference between an operating budget and capital budget 1
Essentially, a business needs more than one budget. Therefore, you should have both an
operational budget and capital budget. In addition, it is important to know how these budgets
affect one another. In other words, you need to be familiar with the operating and capital
budgeting so that you can effectively guide your business finance.
Capital budget
When you are budgeting for capital expenditures, you have to purchase assets. Assets include
property and equipment that have to last you for more than one year. The budgeting for the assets
purchase has to come from cash on hand if to qualify as capital budget expenditures. You need to
have capital budget if to continue growing your business.
Operational budget
The operational budget covers the day to day expenses. This includes rent, wages, utilities,
purchase of items that are purposely intended to last for more than year. For instance, if you
consider borrowing money for capital expenditures, the expense has to come out o your
operational budget because you have to service the loan in question with the monthly payments.

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Running Head: Difference between an operating budget and capital budget The difference between an operating budget and capital budget Institution Affiliation Date 1 Running Head: Difference between an operating budget and capital budget Essentially, a business needs more than one budget. Therefore, you should have both an operational budget and capital budget. In addition, it is important to know how these budgets affect one another. In other words, you need to be familiar with the operating and capital budgeting so that you can effectively guide your business finance. Capital budget When you are budgeting for capital expenditures, you have to purchase assets. Assets include property and equipment that have to last you for more than one year. The budgeting for the assets purchase has to come from cash on hand if to qualify as capital budget expenditures. You need to have capital bud ...
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