CLEP Marketing Practice Exam 2026 – All-in-One Guide to Achieve Top Scores!

Functional accounts focus specifically on the purpose of each expense within a business. This type of accounting categorizes expenses based on their function such as administration, selling, production, or research and development. By organizing expenses in this manner, businesses can analyze how much they are spending in different areas and assess the effectiveness and efficiency of those expenditures in relation to their overall strategic objectives.

Understanding the purpose of each expense helps management make informed decisions regarding budgeting and resource allocation, as it highlights areas where cost control may be necessary or pinpointing which functions are driving value. This approach contrasts with other categories, such as inventory valuation or profit margins, which do not focus specifically on the purpose behind the spending.