Which of the following statements about government budgets is true?

The statement that governments are legally bound by appropriations is accurate and reflects a fundamental aspect of governmental financial management. When a government passes a budget, it establishes a legal framework that authorizes the expenditure of funds. These appropriations specify how much money can be spent on various programs and activities, thereby creating a binding commitment that public officials must adhere to. This legal requirement ensures accountability and transparency in the use of public resources, allowing government entities to operate within the limits of their authorized funding.

Additionally, the appropriations process helps to prevent overspending, as government agencies cannot exceed the budgeted amounts without further legislative approval. This characteristic of government budgets underscores their importance, making them a crucial component of public finance and fiscal responsibility.

In contrast, the other statements do not accurately represent the role and function of government budgets. Budgets are essential rather than optional, serve significant purposes in financial management, and are much broader in scope than merely revenue generation—they also encompass expenditures, priorities, and fiscal strategies.