What does 'other comprehensive income' (OCI) comprise?

Other comprehensive income (OCI) consists of certain gains and losses that are not recognized in profit or loss for the period. The understanding of OCI is essential as it helps to present a more comprehensive view of a company's financial performance and situation beyond the net income reported in the income statement.

The correct answer focuses on gains and losses from available-for-sale financial assets. These items are recorded in OCI as they may affect the equity of the company but are not included in profit or loss until they are realized, which occurs when the asset is sold or otherwise disposed of. Thus, this classification allows for a clearer understanding of changes in asset values separate from the core operational performance of the company.

The other options do not accurately represent OCI components. Items recycled into profit or loss generally refer to elements that have been reclassified from OCI to the income statement, rather than being part of OCI itself. Cash flow from operating activities is a measure of cash generated from core business operations, distinct from comprehensive income, and therefore does not fall under OCI. Accounting policies, while crucial to financial reporting, do not qualify as components of OCI but rather describe how transactions and events are measured and reported in the financial statements.