Which of the following statements is true about the statement of cash flows?

The statement of cash flows is a crucial financial document that provides insights into the cash generated and used by a company during a specific period. The true statement about the statement of cash flows is that it includes cash flows from operating, investing, and financing activities. This breakdown helps stakeholders understand the sources and uses of cash, offering a comprehensive view of how cash is managed and the liquidity of the organization.

Operating activities involve the cash effects of transactions that enter into the determination of net income, such as receipts from sales and payments to suppliers and employees. Investing activities include cash flows related to the acquisition and disposal of long-term assets and investments. Financing activities encompass cash transactions involving debt and equity, such as issuing stocks or bonds and paying dividends. This detailed categorization is essential for stakeholders to assess an organization's cash management practices and ability to generate cash from its core operations.

The other statements do not accurately reflect the nature of the statement of cash flows. For instance, while the statement of cash flows does contribute valuable information on financial performance, it does not measure performance at a specific point in time but rather over a period. Additionally, while the statement of cash flows provides important information, it is interconnected with the income statement, as it helps to reconcile the net income