Estimating Practice Exam

Which function in a construction company records all the expenses incurred in the operation of the entire company?

1. Project management

2. Cost accounting

3. Financial planning

4. Resource allocation

The correct answer is: Cost accounting

The function that records all the expenses incurred in the operation of the entire company is cost accounting. This area of accounting focuses specifically on capturing the company's total expenses, including direct and indirect costs associated with projects and operations. It provides detailed records and analyses, enabling the management to assess profitability, control costs, and make informed financial decisions. Cost accounting involves the systematic tracking, recording, and analyzing of costs associated with a company's operations, which includes materials, labor, overhead, and any other expenses relevant to the business activities. It serves as an essential tool for management by delivering valuable insights into which aspects of the operation are cost-effective and where savings can be achieved. The other functions listed, while important in their own right, focus on different aspects of the business. Project management oversees the planning and execution of specific projects but does not encompass overall company expenses. Financial planning is more about strategizing future finances rather than recording past expenses. Resource allocation deals with the distribution of resources (like labor and materials) but does not directly track the overall expenditure of the company. Therefore, the emphasis on accurately recording expenses makes cost accounting the correct choice for this question.