A Level History - America - Practice Exam 2026 - Free Practice Questions and Study Guide

The Budget and Accounting Act, enacted in 1921 during President Warren G. Harding's administration, established an essential framework for federal budget management in the United States. This legislation created a systematic approach to government spending by instituting a formal budgetary process. It aimed to ensure accountability and oversight within federal financial operations, effectively regulating how governmental funds were allocated and expended.

The act mandated the preparation of an annual budget, which would be submitted to Congress, thus allowing for greater transparency and control over governmental finances. Additionally, it established the Bureau of the Budget, which later became the Office of Management and Budget. This was significant in streamlining the preparation of the federal budget and setting guidelines for fiscal responsibility, marking a critical step towards modern budgeting practices in the U.S. government.

Understanding the context of this act highlights its pivotal role in shaping how America managed its finances and the implications it had on subsequent economic policy, especially during a period characterized by a post-World War I economic environment.