Which of the following best describes cost accounting?

Cost accounting primarily focuses on capturing a company's total production costs and preparing detailed reports to monitor and analyze these costs. This includes examining direct materials, direct labor, and overhead costs associated with manufacturing products or providing services. By analyzing production costs and operating expenses, businesses can make informed decisions about pricing, budgeting, and financial strategies, ensuring improved efficiency and profitability.

The other descriptions do not encapsulate cost accounting accurately. For instance, managing taxes effectively pertains to tax accounting rather than cost accounting. Recording all financial transactions relates to general accounting practices but lacks the specific focus on costs. A strategy for increasing sales revenue is more aligned with marketing and sales management than with the core functions of cost accounting. Thus, the correct option is the one that highlights the analytical aspect of production costs and operating expenses, which is central to cost accounting.