Final answer:
The statement of cash flows details the sources and uses of cash, reports cash receipts and payments, and consists of three main sections: operating, investing, and financing activities.
Step-by-step explanation:
The statement of cash flows is a financial statement that details the sources and uses of cash within a specific period of time, typically a year. It presents information about cash receipts and cash payments and categorizes them into three main sections: operating activities, investing activities, and financing activities.
One correct statement about the statement of cash flows is that it details the sources and uses of cash. This means it provides information on where the company's cash came from (sources) and how it was used (uses).
Another correct statement is that in certain circumstances, the statement of cash flows can replace the statement of retained earnings. However, this is typically not the case as both statements serve different purposes. The statement of retained earnings focuses on changes in a company's retained earnings from one period to another, while the statement of cash flows focuses on the movement of cash.
The third correct statement is that the purpose of the statement of cash flows is to report cash receipts and cash payments during a period. It helps users of financial statements understand the cash flow performance of a company and its ability to generate and use cash.