The essential difference between an AC generator and a DC generator is that:
A. AC generator has an electromagnet while a DC generator has permanent magnet
B. DC generator will generate a higher voltage
C. AC generator will generate a higher voltage
D. AC generator has slip rings while DC generator has a commutator.

Hint: First, understand what the generator is and what it does. State the types of generator. Understand the working of generators. Using this information you have collected, find out the difference between AC and DC generators and mark the correct option.

Complete step by step solution:
A generator:
The machine that converts mechanical energy into electrical energy is called a generator. It works on the principle of Faraday’s Law of Electromagnetic Induction. Depending on the type of output signal there are two types of generator:
1. AC generator: The output of the AC generator is an AC signal i.e. current is in the form of alternating sinusoidal waves. It has slip rings, which is an electromechanical device used for the transmission of power and electrical signals from a stationary to a rotating structure. A slip ring is used in electromechanical systems that require rotation while transmitting power or signals.
2. DC generator: The output of the DC generator is a DC signal i.e. output current has a constant value and it does not change with time. It has a commutator which is used for the commutation purpose in DC generators. A commutation is a process in which an alternating current generated in the armature winding of a dc machine is converted into direct current after going through the commutator and the stationary brushes.
Hence option D is correct (AC generator has slip rings while the DC generator has a commutator.)

Note: Using turbines and generators electricity is produced at power stations. This production of electricity is based on Faraday’s laws of induction which states that an emf is generated when the coil moves in the presence of a magnetic field or magnetic flux linked with the coil changes with time. The e.m.f. generated in the coil and hence the output current depends on the number of turns in the coil, magnetic field strength, and the speed of the rotating field.