Tseng heard that Cloud was found on the catwalk with a hole in his stomach while Zack was retrieved along with his Buster Sword who had Sephiroth's blood on it and Jenova's head was missing, from which he surmissed that Tifa was the first to confront the man, failed and passed out thinking about Cloud's promise to her. Zack then confronted Sephiroth, failed, and was knocked out then it was Cloud that snuck up on Sephiroth with the Buster Sword, stabbed him, went back down stairs to care for Tifa who woke up to see him and see that he came to save her, then Cloud confronted Sephiroth again, who stabs him but sees something in Clouds eye and shall we say "took a leap of faith". Then Tifa's master came along to retrieve her..
Which incredibly close to the truth given what he had to work with but the discrepencies can only be explained by Tseng, not only being a classic romanticus but having extremely creative imagination and has some balls putting stuff like this in an official report.
But yes, I may be derailing the topic.