Which term is a legal commitment by an authorized federal employee that binds the Government to a future expenditure?

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

Answer: (B)

In federal budgeting, an obligation is the legal commitment by an authorized official to pay funds in the future. When the government enters into a binding agreement—such as a contract or purchase order—it creates a liability and a commitment to make payments as goods or services are received. The actual payment made later is called the outlay, which occurs after the obligation has been established. A contractor is simply a party involved in the transaction, and a model has no relevance here.