Which of the following statements is TRUE regarding the statement of cash flows?

The statement of cash flows is an essential financial statement that provides detailed information about the cash inflows and outflows of a company during a specific accounting period. It effectively reports the sources and uses of cash, categorizing these into operating, investing, and financing activities. This focus on cash movements helps stakeholders understand how a company generates cash, where it spends cash, and its overall liquidity position throughout the period.

In contrast, while the statement of cash flows is used in conjunction with the balance sheet (as it provides insights into cash that are not reflected on the balance sheet), the primary relationship is not characterized as the two working "in tandem." Instead, the cash flow statement complements the balance sheet by explaining changes in cash that lead to the overall financial condition presented on the balance sheet.

Moreover, stating that there are four types of cash flows is misleading; the standard practice is to categorize cash flows into three primary types: operating, investing, and financing. Lastly, the statement of cash flows does not show a company’s financial position at a specific point in time; rather, it reflects the cash changes over an accounting period, a fundamental distinction. Thus, option D accurately captures the essence and purpose of the statement of cash flows by detailing the movement of cash