Which of the following is a permanent account?

• A. Dividends
• B. Service Revenue
• C. Retained Earnings
• D. Rent Expense

Answer: (C)

Verified step by step guidance

1. Understand the difference between permanent and temporary accounts. Permanent accounts are those that carry their balances forward into the next accounting period, while temporary accounts are closed at the end of each accounting period and their balances are transferred to permanent accounts.
2. Identify the types of accounts listed in the problem: Dividends, Service Revenue, Retained Earnings, and Rent Expense. Categorize each as either permanent or temporary based on their nature.
3. Dividends are a temporary account because they are closed to Retained Earnings at the end of the accounting period.
4. Service Revenue is a temporary account because it is part of the income statement and its balance is closed to Retained Earnings at the end of the accounting period.
5. Retained Earnings is a permanent account because it is part of the equity section of the balance sheet and its balance carries forward into the next accounting period. Rent Expense is a temporary account because it is part of the income statement and closed at the end of the accounting period.