Differentiate between operating budget and Capital budget

An operating budget is a financial plan that outlines the income and expenses of a business for a specific period of time, usually one year. It typically includes all the day-to-day expenses required to run the business, such as salaries, rent, utilities, and supplies. An operating budget helps manage cash flow and track the financial health of the business on a short-term basis.

On the other hand, a capital budget is a financial plan that outlines the long-term investments and expenditures of a business. It typically includes major purchases and investments in assets that will generate revenue over a longer period of time, such as equipment, buildings, and infrastructure. A capital budget helps businesses plan for future growth and expansion by allocating resources for larger, one-time expenditures.

In summary, operating budgets focus on day-to-day expenses and short-term financial planning, while capital budgets focus on long-term investments and major expenditures to support the growth and development of the business.