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What does commitment mean in terms of Accountancy?
The management of Government in financial terms is really different from the private sectors. That is when they call it commitments when they give their words in terms of some services to provide someone. Commitments generally affect the financial situations or, as they say, Ledger. They affect the three things p revenue, payroll and purchasing.
What does Commitment represent?
Commitments generally represent-
- The starting of theprocess of expenditure.
- Purchase Requisition generation is the source of the Commitment representation.
- Setting aside a represented budget.
- Saves are exceeding of budgets.
What are the benefits?
There are actually multiple benefits in using Commitments. Some are here below:
- Future costs helping.
- No overspending guarantee.
- Sufficient funds ensured.
- Flexibility in transfer of budgets.
- Budget balancing.
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