O Revenue accounts are o subset of assets and expense accoun

O Revenue accounts are o subset of assets, and expense accounts are subcategories of liabilities O Both revenue accounts and expense accounts are subcategories of essets O Both revenue accounts and expense accounts are subcetegories of Retained Eanings O Revenue accounts are a subcetegory of Cash and expense accounts are a subcategory of Accounts Payable

Solution

Ans is c. Both revenue accounts and expense accounts are subcategories of retained earnings.

Explanation: Revenue accounts and expense accounts are both a nominal accounts and these accounts are balanced or nullified by transferring the balance in income summary account. Income summary account directly merges in retained earnings account which either reduces its balance or increases its balance, so revenue and expense have direct effect on retained earnings. If expenses are increased , retained earning are decreased and vice versa same way if revenue is increased retained earning balnce is increased or decreased.