Capital projects accounting refers to the financial management and reporting of large$-$scale projects that involve significant investments in assets or infrastructure. These projects typically have a long$-$term impact on an organization and require careful planning, budgeting, and tracking of expenses.

Here are some key aspects of capital projects accounting:

$1.$ Budgeting and Planning: Capital projects accounting involves creating a detailed budget for the project, considering all the costs involved, such as equipment, materials, labor, and overhead expenses. This budget serves as a roadmap for financial planning and helps ensure that the project stays within budget.

$2.$ Cost Tracking and Control: It is crucial to track and control costs throughout the project's lifecycle. This includes monitoring actual expenses against the budgeted amounts, identifying any cost overruns or savings, and taking corrective actions as needed. Accurate cost tracking helps in evaluating the project's financial performance and making informed decisions.

$3.$ Capitalization of Costs: Certain costs incurred during a capital project can be capitalized, meaning they are recorded as assets on the balance sheet rather than being expensed immediately. Capitalizing costs allows for their gradual recognition over the project's useful life, aligning with the matching principle of accounting.

$4.$ Depreciation and Amortization: Assets acquired for capital projects are subject to depreciation or amortization over their useful lives. Depreciation represents the systematic allocation of the cost of tangible assets, such as buildings or machinery, while amortization applies to intangible assets like patents or copyrights. These accounting practices ensure that the costs of the assets are spread out over time.

$5.$ Financial Reporting: Capital projects accounting involves preparing financial reports that provide an overview of the project's financial status. These reports may include income statements, balance sheets, cash flow statements, and specific project$-$related reports. They provide stakeholders with insights into the project's financial performance and help in decision$-$making.

Question: Capital projects accounting involves the systematic allocation of costs through $----------$ and amortization. A$)$ Budgeting B$)$ Depreciation C$)$ Cost tracking D$)$ Financial reporting