The Board of Trustees of the City of Toronto approved the appropriations budget for its general fund for the calendar year ended December 31 of the current year as shown below:

• General Government $500,000
• Public Safety 2,800,000
• Public Works 1,200,000
• Health and Welfare 1,300,000
• Culture and Recreation 700,000
• Contributions to Pensions 600,000
• Total Appropriations $7,100,000

1. Explain the legal significance of an appropriation.
2. It is illegal for a governmental unit to spend money for any purpose unless a valid appropriation for that purpose exists. Does this legal rule assure good financial management for each governmental unit? Why or why not?