The authority to enter into obligations that will result in outlays is called?

The authority to enter into obligations that will result in outlays is called?

• A. Deferrals
• B. Obligations
• C. Commitments
• D. Budget Authority

Answer: (D)

In budgeting, the key is the legal permission to commit resources. Budget authority is the authorization that allows an agency to incur obligations—binding commitments that will eventually result in outlays. Without this authority, no contract, purchase, or other binding obligation can be legally created, even if the need is urgent. The obligation itself creates a liability, and when funds are disbursed, that’s the actual outlay. Deferrals shift when outlays are recognized but don’t grant the ability to incur obligations. A commitment may reflect a planned use of funds, but it’s budget authority that provides the legal basis to enter into those obligations in the first place. So, the authority to enter into obligations that will result in outlays is budget authority.

In budgeting, the key is the legal permission to commit resources. Budget authority is the authorization that allows an agency to incur obligations—binding commitments that will eventually result in outlays. Without this authority, no contract, purchase, or other binding obligation can be legally created, even if the need is urgent. The obligation itself creates a liability, and when funds are disbursed, that’s the actual outlay. Deferrals shift when outlays are recognized but don’t grant the ability to incur obligations. A commitment may reflect a planned use of funds, but it’s budget authority that provides the legal basis to enter into those obligations in the first place. So, the authority to enter into obligations that will result in outlays is budget authority.