How does the statement of cash flows relate to the balance sheet and income statement?

The statement of cash flows provides a comprehensive view of how cash flows in and out of a business over a specific period, whereas the balance sheet and income statement serve different purposes. The balance sheet is often considered a "snapshot" of a company's financial position at a particular point in time, showing what the company owns (assets) and owes (liabilities) along with shareholder equity. The income statement, on the other hand, summarizes revenues and expenses over a period, reflecting the company's operational performance.

The key reason option A is the correct answer is that it highlights the similar nature of the balance sheet and the income statement as being static representations of financial information at a singular point in time. While the cash flow statement reflects dynamic cash movements over time, identifying the financial health and operational efficiency through these movements, both the balance sheet and income statement can be seen as snapshots that provide insights into the company's overall financial condition and performance at a specific moment.

The other options do not accurately capture the relationship or function of these financial statements. The income statement includes both cash and non-cash revenues, the statement of cash flows does not consolidate assets and liabilities in the same sense a balance sheet does, and the balance sheet does not show future cash projections but rather the current