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

Prepare for the Certified Defense Financial Manager Exam 1. Study with flashcards and multiple choice questions. Each question includes hints and explanations to boost your knowledge. Ace your exam with confidence!

Multiple Choice

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

Explanation:
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.

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