A loss
A)occurs if operating expenses exceed cost of goods sold.
B)is not closed to Retained Earnings if it would result in a debit balance.
C)is closed to Retained Earnings even if it would result in a debit balance.
D)is closed to the Common Shares account.

Question

Quizplus · Accepted Answer

A loss is closed to Retained Earnings even if it would result in a debit balance, as Retained Earnings is used to record the accumulated earnings (or losses) of a company. Option A is incorrect as it refers to Gross Profit and not a loss. Option B is incorrect as a debit balance in Retained Earnings is still closed at the end of the accounting period. Option D is incorrect as Common Shares account is not relevant for recording a loss.

A Loss