What term describes the period during which a budget may remain in force to allow for the liquidation of encumbrances?

The term that describes the period during which a budget may remain in force to allow for the liquidation of encumbrances is known as the lapse period. This period is critical in the budgeting process, particularly in government and nonprofit accounting, as it provides the necessary time for any outstanding obligations, or encumbrances, that were recorded against the budget to be settled.

During the lapse period, funds that would otherwise expire at the end of the fiscal year remain available for these purposes, ensuring that commitments made during the budget period can still be fulfilled. This continuity is essential for responsible financial management, as it allows for the completion of projects and activities that were planned but may not have been finalized by the budget’s close.

Other terminology in the options, such as closure period, revision period, and extension period, do not specifically relate to the concept of encumbrance liquidation in the context of budgetary authority, making lapse period the precise term for this phase in budget management.