Which term describes the money obligated by the government for future expenditures?

Which term describes the money obligated by the government for future expenditures?

• A. Obligation
• B. Outlay
• C. Contractor
• D. Model

Answer: (A)

In government budgeting, an obligation is a binding commitment to spend funds in the future. It occurs when the government signs a contract or otherwise commits money, creating a future liability even before any payment is made. An outlay is the actual disbursement of cash, not the commitment to spend. A contractor is the party being paid, and a model has no relevance here. So the term that describes money the government has committed for future expenditures is obligation.

In government budgeting, an obligation is a binding commitment to spend funds in the future. It occurs when the government signs a contract or otherwise commits money, creating a future liability even before any payment is made. An outlay is the actual disbursement of cash, not the commitment to spend. A contractor is the party being paid, and a model has no relevance here. So the term that describes money the government has committed for future expenditures is obligation.