The cash flow statement was added to reporting requirements because it was believed that the income statement and statement of financial position didn’t concentrate enough onprofitability.liquidity.depreciation.bad debt.

The cash flow statement was added to reporting requirements because it was believed that the income statement and statement of financial position didn’t concentrate enough on liquidity.

Here's why:

1. Profitability: While profitability is a key aspect of a company's financial health, it is primarily reflected in the income statement, not the cash flow statement. The income statement shows revenues, costs, and expenses, which are used to calculate net income or profit.

2. Liquidity: This is the main reason why the cash flow statement was added to reporting requirements. Liquidity refers to a company's ability to meet its short-term obligations. The cash flow statement provides information about a company's cash inflows and outflows, showing how the company generates and uses cash. This information can help assess the company's ability to generate cash to meet its current liabilities.

3. Depreciation: Depreciation is an expense that reduces the value of an asset over time. It is typically included in the income statement and also reflected in the balance sheet by reducing the book value of the asset. It does not directly affect cash flow, although it is added back to net income in the operating activities section of the cash flow statement because it is a non-cash expense.

4. Bad Debt: Bad debt is an expense that represents uncollectible accounts receivable. It is typically included in the income statement. While bad debt can indirectly affect cash flow (since it represents revenue that was recognized but will not be collected), it is not the primary focus of the cash flow statement.

Therefore, the cash flow statement was added to reporting requirements to provide more information about a company's liquidity.