Which of the following is a permanent account?

• A. Asset
• B. Liability
• C. Revenue
• D. Expense

Answer: (B)

Permanent accounts are balance sheet accounts whose balances carry forward into the next period. They include assets, liabilities, and equity. Because their ending balances aren’t reset each period, they keep accumulating over time. In contrast, revenues and expenses are temporary accounts; they’re closed at the end of the period and start the next period with zero balances, with their net effect rolled into equity.

So, both the asset and the liability are permanent accounts. The example focuses on a liability, but an asset would be permanent too. The key idea is that balance sheet items (assets, liabilities, equity) persist across periods, while income statement items (revenues, expenses) do not.