Understanding Energy: Where Does Initial Energy Remain?

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BruceNakagawa
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We are all told that energy keeps on transforming that energy can be neither created or destroyed, but there is something I cannot just comprehend.

Take a object, any object, falling towards Earth for example, it keeps on accelerating because Earth's gravity is pulling on it, that's the Objects energy at work, when the object collides with the ground it will lift off a few dust or sand particles from the ground, so I can understand that the energy of the object was transferred into all those dust particles, but when the dust particles in turn, fall to Earth, where does the initial Energy remains?
 
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The short answer is that most of the energy ends up as heat.

Most of the energy will be turned from kinetic (speed of object) to thermal (heating up of impact area). Immediately after the impact this heat will be quite evident. After some time the heat will dissipate and spread over a larger area until it matches the ambient temperature. However, the heat is still there, just spread out so thin it's not as noticeable.