Question

Many public organizations must spend all budgeted funds within the fiscal year—otherwise, the subsequent year’s budget is __________.

Answer 1

The correct answer that fills the gap is: reduced by the unspent amount.

Step-by-step explanation:

If there is a difference between budgeted and spent (positive or negative), the final result must be charged to the period immediately following. Otherwise it happens with long-term obligations, which are recognized in future periods until it is completely exhausted.