Profit for the year links income to equity

Steps:

• Recall income statement reports revenues, expenses, and net profit for the year.
• Recall statement of changes in equity starts with prior equity, adds profit, subtracts dividends/transfers, and ends with current equity.
• Compare choices: only profit directly flows from income statement to equity statement.
• Confirm profit is the connecting item per IFRS/IAS 1 standards.

Why C is correct:

• Profit for the year is the net result of the income statement (revenues minus expenses) and is added to retained earnings in the statement of changes in equity per IAS 1.

Why the others are wrong:

• A: Accrued interest is an expense in the income statement but not shown in changes in equity.
• B: Dividend paid is deducted from equity in changes in equity but is an appropriation, not in the income statement.
• D: Transfer to general reserve is an equity reallocation in changes in equity but not in the income statement.

Final answer: C