Notes to Financial Statements

AuthorVern Krishna
Chapter 13: Notes to Financial
A complete set of nancial statements includes the Notes, which are
a form of accounting footnotes that disclose additional information
about the enterprise. e purpose of the Notes to the nancial state-
ments is to enhance our understanding of the statements and to pro-
vide context and some detail of accounting principles. e theory is
that the Notes should communicate relevant information in a read-
able form to assist the user in analyzing the statements. Unfortunately,
management sometimes uses the Notes to obfuscate, minimize, or
bury important information.
e Notes to the nancial statements are similar to footnotes in
a legal document. ey provide supplemental information to the
reader of the statements and disclose management choices in selecting
between alternative accounting principles and methodologies. Since
accounting involves choices between alternative methods of revealing
nancial information, management should select the method that is
most appropriate to its particular business and operations. e Notes
describe the important accounting policies that management adopts
and, where necessary, explain changes in such policies between suc-
cessive nancial statements.
e Notes contain information on aspects of business operations
that cannot conveniently be disclosed in the body of the nancial

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT