What type of budget requires predicting both revenues and expenses for a certain period?

An operating budget is designed to outline anticipated revenues and expenses for a specific time period, often on an annual basis. This type of budget plays a critical role in managing the day-to-day operations of a business, as it allows managers to make informed decisions regarding operational efficiency, resource allocation, and financial planning.

By forecasting revenue, the operating budget enables an organization to set performance benchmarks and measure success against those projections. Similarly, by estimating expenses, it facilitates cost control and helps avoid overspending. This holistic view of both income and expenditure is essential for maintaining financial health and operational effectiveness throughout the designated period.

In contrast, a cash flow budget focuses specifically on the inflow and outflow of cash, overlooking revenue and expenses in a broader sense; a capital budget is concerned with long-term investments in assets rather than operational performance; and a production budget typically centers on the quantity of products to be manufactured and the resources needed for that, rather than the overall revenues and expenses associated with those activities.