Which of the following is NOT a temporary account in financial accounting?

• A. Expenses
• B. Owner's Capital
• C. Dividends
• D. Revenue

Answer: (B)

Verified step by step guidance

1. Understand the concept of temporary accounts: Temporary accounts are accounts that are closed at the end of an accounting period. These include revenue, expenses, and dividends, as their balances are transferred to permanent accounts (e.g., Retained Earnings or Owner's Capital).
2. Understand the concept of permanent accounts: Permanent accounts are not closed at the end of an accounting period. They carry their balances forward to the next period. Examples include assets, liabilities, and equity accounts such as Owner's Capital.
3. Analyze the options provided: Identify which accounts are temporary and which are permanent. Revenue, Expenses, and Dividends are temporary accounts because their balances are reset to zero at the end of the period. Owner's Capital, however, is a permanent account because it reflects the owner's equity and is not closed.
4. Determine the correct answer: Since the question asks for the account that is NOT a temporary account, the correct answer is 'Owner's Capital,' as it is a permanent account.
5. Conclude the reasoning: Temporary accounts (Revenue, Expenses, Dividends) are closed to Retained Earnings or Owner's Capital, while permanent accounts like Owner's Capital remain open and carry their balances forward.