Thursday, October 8, 2009

Notes to Financial Statements

What kind of information do accountants include in notes to the financial statements?

Even though they might be below the income statement, notes to financial statements are very important and explain ambiguous terms, accountings standards, and methods used to present these financial statements. Notes to financial statements provide clarity to the user of the financial statement.

These notes typically contain this type of information:

  • Accounting Principles adopted by the company (nature of business, Accounting policies)
  • Dividends due to shareholder
  • Details about Property, equipment & Plant
  • Depreciation methods and details
  • Forecasts, Budgets
  • Account Receivable and other Receivables
  • Longterm Debt details (Amortization)
  • Dividends due to shareholders
  • Authorized, Issued and subscribed capital
  • Employees Fund, Pension Plan
  • Contractual Obligations
  • Contingent Liabilities

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