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

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

Answer: (D)

Budget authority is the legal permission to incur obligations that will result in outlays. It comes from appropriations or other funding sources and sets the ceiling for what an agency can commit or spend. An obligation is a binding liability that the government pledges, and an outlay is the actual cash payment that follows. The authority to enter into obligations that will result in outlays is budget authority because it authorizes those commitments and future payments. Deferrals postpone spending authority to a later period, not the authority itself; commitments and obligations are stages in the process, not the authority.