In the flow of funds, which step comes immediately after Commitment?

In the flow of funds, which step comes immediately after Commitment?

• A. Apportionment
• B. Allotment
• C. Outlay
• D. Obligation

Answer: (D)

Commitment is the stage where funds are set aside in principle to cover a potential transaction, signaling an intent to spend. The next action is obligation because a binding legal liability is created when the government enters into a contract or makes a formal purchase against those funds. Once an obligation exists, the agency has a real liability to pay, and only after that can cash actually be disbursed as an outlay. Earlier steps like apportionment and allotment distribute authority and resources within the period, and outlay is the actual cash payment, which comes after obligation. Therefore, the step immediately after commitment is obligation.

Commitment is the stage where funds are set aside in principle to cover a potential transaction, signaling an intent to spend. The next action is obligation because a binding legal liability is created when the government enters into a contract or makes a formal purchase against those funds. Once an obligation exists, the agency has a real liability to pay, and only after that can cash actually be disbursed as an outlay. Earlier steps like apportionment and allotment distribute authority and resources within the period, and outlay is the actual cash payment, which comes after obligation. Therefore, the step immediately after commitment is obligation.