Profit from equity changes and appropriations Steps:

• Note opening total equity of $50,000 and closing total equity of$108,000.
• Calculate net increase in total equity: $108,000 -$50,000 = $58,000.
• Adjust for dividends paid, which reduce equity: add $25,000 to the net increase.
• Profit for the year = $58,000 +$25,000 = $83,000 (transfer to reserve is internal and ignored). Why C is correct:
• Per accounting standards (e.g., IAS 1), profit = closing equity - opening equity + dividends paid, as dividends are distributions reducing equity while transfers between reserves do not. Why the others are wrong:
• A. $46,000: Erroneously includes transfer to reserve as if it were a distribution affecting total equity.
• B. $58,000: Fails to add back dividends, understating profit by ignoring the equity reduction from payouts.
• D. $90,000: Overstates by possibly adding transfer or miscomputing the equity increase. Final answer: C