Which statement best describes the purpose of cash flow statements?

The purpose of cash flow statements is to report a company's cash inflows and outflows over a specified period. This financial statement provides critical insights into how a company generates cash and manages its cash expenditures, distinguishing between cash flows from operating, investing, and financing activities. Understanding these cash movements is essential for assessing a company's liquidity, financial health, and overall ability to sustain operations and fund growth.

While the other options relate to different aspects of financial reporting, they do not accurately capture the primary function of a cash flow statement. Recording transactions involving liabilities is relevant to other financial statements, particularly the balance sheet or income statement, while summarizing financial condition at a specific date pertains more to the balance sheet. Showing a company's net worth relates to equity on the balance sheet rather than focusing on cash flows. Thus, the correct choice highlights the unique and vital role cash flow statements play in financial analysis.