"Is the budget typically cash basis? Classic example, prepaid expense. On financials, expense recorded each month. So budget = cash basis financials?"
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No. the P&L budget should always be accrual basis. That’s why it’s essential to also build an integrated cash flow statement, which converts the P&L to cash impact and then adds on all the cash impacts that do not flow thru the income statement. In that fashion you have the benefit of being able to plan and manage both the cash and the reportable P&L results.
Your budget should always match your actual
