If a corporation reports a profit, it should be closed to retained earnings.If it reports a loss, it should be closed to a contributed capital account.

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If a corporation reports a profit, it should be closed to retained earnings. If it reports a loss, it should be closed to accumulated deficit or retained earnings deficit, not a contributed capital account. Contributed capital accounts reflect the amounts invested by shareholders, not the profitability or financial performance of the corporation.

If a Corporation Reports a Profit, It Should Be Closed