Certified Building Official Management Practice Exam

What type of information does a line-item budget collect and report?

1. Expenditure categories

2. Resources used

3. Income sources

4. Operational costs

The correct answer is: Resources used

A line-item budget primarily focuses on tracking and reporting specific categories of expenditures, detailing how funds are allocated across various items or services. This type of budget breaks down costs in a comprehensive way, allowing for a detailed view of spending. Each line item corresponds to a specific expense, which could include salaries, materials, overheads, and other operational costs, but primarily emphasizes expenditure categories. While the other choices mention important aspects of budgeting, they do not fully capture the core function of a line-item budget. Resources used and income sources pertain to different financial management aspects, such as resource allocation effectiveness or revenue generation, rather than the detailed tracking of spending. Operational costs, though relevant, represent just one part of the broader category of expenditures that a line-item budget encompasses. Thus, the focus on expenditure categories is crucial in understanding the utility and design of a line-item budget. It allows for accountability and transparency in financial reporting, making it easier for stakeholders to review where and how funds are being utilized.