Which of the following financial statements reports changes over a period of time?

• A. Income Statement
• B. Balance Sheet
• C. Statement of Financial Position
• D. Statement of Cash Flows

Answer: (D)

Verified step by step guidance

1. Understand the nature of financial statements: Financial statements are formal records of the financial activities and position of a business, and they can either report a snapshot at a specific point in time or changes over a period of time.
2. Identify the key characteristics of each financial statement: The Income Statement and Statement of Cash Flows report changes over a period of time, while the Balance Sheet and Statement of Financial Position provide a snapshot of the company's financial position at a specific date.
3. Focus on the Statement of Cash Flows: This statement specifically reports the inflows and outflows of cash during a given period, categorizing them into operating, investing, and financing activities.
4. Compare the Income Statement and Statement of Cash Flows: Both report changes over time, but the Income Statement focuses on revenues and expenses to determine net income, while the Statement of Cash Flows focuses on cash movements.
5. Conclude that the Statement of Cash Flows is the correct answer for reporting changes in cash over a period of time, as it provides detailed insights into how cash is generated and used during the reporting period.