Which classification method involves separating expenditures by the organization involved?

The classification method that involves separating expenditures by the organization involved is the organizational unit classification. This method groups expenditures to align with specific units, departments, or agencies within a governmental entity. By doing so, it allows for a clearer exploration of how funds are allocated and utilized across different parts of the organization. This classification helps in assessing the performance and operational efficiency of each unit within the governmental structure, providing valuable insights for budgetary and financial reporting purposes.

In contrast, other classification methods focus on different aspects of expenditures. Functional classification categorizes expenditures by the function or purpose, such as public safety or education. Character classification emphasizes the nature of the expenditure, such as salaries or capital outlays. Activity classification organizes expenditures by activities undertaken, such as maintenance or construction. Each of these classifications serves distinct purposes in financial reporting, but when the focus is specifically on the organizational involvement, the organizational unit classification is the appropriate method.