The Dividends account is a temporary account.

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The Dividends account is a temporary account because it tracks the amount of dividends paid to shareholders during a specific period, typically a quarter or a year. At the end of the accounting period, the balance of the Dividends account is closed out to the Retained Earnings account in the stockholders' equity section of the balance sheet. This means that the Dividends account does not carry over from one period to the next and is reset to zero at the start of each accounting period. Therefore, it is considered a temporary account rather than a permanent account like assets, liabilities, and stockholders' equity.

The Dividends Account Is a Temporary Account