Why is the cash flow statement useful to the users of the financial statements?

A.

The statement of cash flows summarizes cash inflows and outflows for a firm over a period of time. It is a flow statement that is only used to explain income and expenses from operations. The statement is also specifically useful in explaining changes in the bank balance.

B.

The statement of cash flows summarizes changes in accounts receivable and accounts payable. It is a summary statement that is used for aging receivables and payables. The statement is also useful in explaining stockholders' equity, particularly when the statement is used with other financial statements and related footnote disclosures.

C.

The statement of cash flows lists all transactions where cash was involved. The statement is useful in explaining and reconciling cash in bank and cash on hand.

D.

The statement of cash flows summarizes cash inflows and outflows for a firm over a period of time. It is a flow statement that is used to explain the change in cash and cash equivalents. The statement is also useful in explaining and reconciling many other significant changes in balance sheet items, particularly when the statement is used with the other financial statements and related footnote disclosures