Which of the following is true about cash flow statements?

The statement that cash flow statements show cash inflows and outflows from all activities is accurate because cash flow statements are designed to provide a comprehensive overview of a company's cash position over a specific period. These statements categorize cash flows into three main activities: operating, investing, and financing.

By detailing cash inflows and outflows from these areas, the cash flow statement allows stakeholders to understand how well a company generates cash from its operations, how it funds its investments, and how it finances its overall growth. This insight is crucial for assessing the liquidity and overall financial health of the organization, distinguishing it from other financial statements that might focus on net income, balance sheet positions, or financial ratios.

This comprehensive view of cash movements helps investors, creditors, and management make informed decisions regarding the company’s cash management practices and operational efficiency.