What is defined as an operating budget?

An operating budget is specifically designed to outline the revenues and expenses associated with the day-to-day operations of a business. This type of budget focuses on the short-term financial plans that are essential for running the organization's daily functions effectively. Typically, it includes projections for sales, costs of goods sold, and operating expenses to ensure that the organization can maintain its operations and profitability over a specified period, often a fiscal year.

This answer correctly identifies the primary purpose of an operating budget, which serves as a fundamental tool for management in planning and controlling operations. By tracking the expected revenues and comparing them to the anticipated costs—together comprising the operational activities—it provides valuable insights into the financial health of the business and aids in decision-making processes.

In contrast, the other options represent different types of financial documents or budgets. Long-term investments would be more appropriately addressed in a capital budget, future cash flows are detailed in cash flow projections, and a report summarizing financial performance would reflect past performance rather than future operational plans.