Certified Government Financial Manager (CGFM) 2025 – 400 Free Practice Questions to Pass the Exam

The primary components of Federal Budget Authority encompass various mechanisms through which the government can allocate and spend funds, ensuring that it has the necessary legal power to incur costs and manage resources effectively. The choice that identifies appropriations, authority to borrow, contract authority, and spending authority from off-setting collections is correct as these components represent the foundational elements of budget authority.

Appropriations refer to the formal legal permission granted by Congress to use funds for specified purposes. This is essential for government operations as it delineates how much money can be spent and for what activities.

Authority to borrow allows the federal government to secure additional funding through loans and other financial instruments. This is particularly important when expenditures exceed available funds, enabling the government to fulfill its financial obligations.

Contract authority grants the government the ability to enter into binding agreements that obligate funds even if appropriations have not yet been made for those expenditures. This is crucial for ensuring continuity of services and programs, especially in scenarios where immediate funding is necessary but the bureaucratic process of appropriation might delay resource availability.

Finally, spending authority from off-setting collections permits the government to spend income generated from specific fees or collections, making it more efficient in funding programs that generate their own revenue.

Together, these components ensure that