International Baccalaureate (IB) Practice Exam 2026 – Complete Study Resource

The cash flow statement is the financial statement that accurately reflects income and outgo over a specific period. It provides a detailed analysis of all cash inflows and outflows, categorizing them into operating, investing, and financing activities. This statement shows how cash is generated and spent during the reporting period, making it essential for understanding a business's liquidity and financial health.

In contrast, the balance sheet provides a snapshot of a company's financial position at a single point in time, outlining its assets, liabilities, and equity, but does not detail the flow of cash. The profit and loss statement (also known as the income statement) summarizes revenues and expenses over a period, showing how much profit or loss was made, but it does not specifically track cash movements. The budget statement serves as a financial plan that outlines anticipated income and expenditures but does not represent actual cash flow.