What does an operating budget outline?

An operating budget specifically outlines the expected revenues and expenses related to the day-to-day functioning of a business over a certain period, typically a year. This budget serves as a financial plan that helps in predicting how much money will be earned through operations and how much will be required to cover ordinary operating costs such as salaries, rent, utilities, and inventory. By focusing on these aspects, the operating budget provides essential insights that assist business managers in making informed decisions regarding resource allocation, financial planning, and performance evaluation.

In contrast, the other options pertain to different financial concepts or planning aspects. For instance, outlining expected revenues and expenses for a large investment relates more to capital budgeting rather than operational budgeting. Personal financial goals of the owner are more aligned with personal finance planning rather than business operations, and sales forecasts for new products would usually be part of a marketing budget or business development plan rather than the operating budget. Thus, the correct answer aligns perfectly with the function and purpose of an operating budget in managing a small business.