What type of budget is used for day-to-day operational expenses?

The operating budget is specifically designed to manage and allocate funds for day-to-day operational expenses within an organization. This type of budget covers all ongoing costs associated with running the organization, such as salaries, utilities, equipment maintenance, and supplies. Essentially, it outlines the anticipated income and expenditures over a specified period (usually a year) to ensure the organization can effectively manage its resources while supporting its regular activities.

The operating budget is crucial as it reflects the organization's priorities and ensures that all necessary operations can continue without interruption. It allows management to forecast future financial performance and make informed decisions regarding resource allocation.

In contrast, the capital budget focuses on long-term investments and major projects, such as purchasing new equipment or constructing facilities. Performance budgets and program budgets are more specialized and involve assessing specific programs or functions, rather than the overall operational costs required for day-to-day activities.