Which activity involves recording business transactions as they occur?

The activity that involves recording business transactions as they occur is bookkeeping. This process entails systematically tracking and documenting all financial transactions, including sales, purchases, receipts, and payments, in a structured manner. Bookkeeping serves as the foundational element of financial accounting and ensures that all financial data is accurately recorded, which helps maintain an organized record for future reference, reporting, and analysis.

Conversely, financial analysis is focused on evaluating financial data to assess a company's performance and make informed decisions. Auditing involves examining financial records and processes to ensure accuracy and compliance with established standards. Cost management relates to planning and controlling the budget and expenses associated with running a business, which is more about analysis and strategy than the initial recording of transactions. Hence, bookkeeping is distinct because its primary responsibility is the continuous and precise recording of financial transactions as they happen.