I'm going to explain this from the perspective of the income statement, but it should help you understand the cash flow statement at the same time.

When a company earns cash, it goes into its wallet. Now if this were a 'project' instead of a 'company', the cash earned would immediately exit the sphere of the 'project' and go straight to the 'owners'. Thus the cash earned which can be attributed to the project is obvious.

However, a company might choose to retain the cash and reinvest it into a second project instead of giving it back. Now this is a large investment which drains your cash. When investors look at this, it has the wrong effect of attributing your empty cash balance to dismal performance of the first project - when in fact it did very well. So to record actual performance, you split the expense against the revenues of a few periods. This is the concept of the income statement.

However, companies are not static entities; they're constantly in a state of flux. The moment more cash comes in, they immediately increase the amounts they reinvest. Thus it becomes exceedingly important to maintain a record of past performance (i.e. past cash flows earned attributed to past operations), so that past performance is accurately recorded (i.e. distinct from expenses attributed to future growth). This is the net profit amount, and is accumulated in the retained earnings figure.

This also has the great advantage of allowing more complex cash movements like loans, receivables etc. Basically, divorcing the actual cash flows from performance allowed companies to delay or speed up their expenses, which facilitates the liquidity of money itself. We would later recognize this as "float".

That's why in the beginning, the SEC only required income statements and not cash flow statements; because given enough time, the cash flow statement eventually catches up to the income statement. The cash flow statement was therefore effectively redundant for making long term decisions.

The problem arose when companies started to take advantage of this divorce from cash flows to manipulate earnings. For instance, constantly refinancing at higher and higher rates until the Ponzi scheme collapsed. Basically, they realized that only allowing investors to observe the tip of the pyramid - and not the base on which it rests - allowed management to hide stuff for a long time before reality caught up. This was why the SEC reintroduced the cash flow statement - to provide a check and balance against the income statement which was built on top of it.

Remember, the income statement merely matches cash flows across time; so in perpetuity both eventually converge. Thus, even though the cash flow statement was redundant for long term purposes, it made apparent the steps which were taken to arrive at the income statement; so that when the time comes to realize the retained earnings amount, the cash will be there.