Notes To Financial Statements

Question 1

disclose the detailed assumptions made by accountants when preparing a company’s: income statement, balance sheet, statement of changes of financial position or statement of retained earnings. The notes are essential to fully understanding these documents.

Answer 1

Notes to Financial Statements

Question 2

4 General Categories/Classifications of FS Notes

Answer 2

1. Summary of Significant Accounting Policies
2. Additional Information about the Summary Totals Found in the FS
3. Disclosure of Important Information that is not Recognized in the FS
4. Supplementary Information Required by IASB.

Question 3

Accounting involves making assumptions, estimates, and judgements. In addition, in some settings, there is more than one acceptable method of accounting for certain items.

Answer 3

Summary of Significant Accounting Policies

Question 4

Multi-national and large companies usually show summary number in the FS which actually represents thousands or millions of inidividual items.

Answer 4

Additional Information about the Summary Totals Found in the FS

Question 5

One way to report financial information is to include the estimates and judgements in the fs refer to as _____. The key assumptions and estimates are then described in the notes to FS.

Answer 5

Recognition

Question 6

Another approach is to not include the estimates and judgements in the fs statements but instead to explain them in the notes to fs which is called ______. It is the accepted way to convey information to users when the information is too uncertain to be recognized.

Answer 6

Disclosure

Question 7

The IASB requires supplementary information that must be reported in the fs notes, a typical example is the disclosure of information by business segment, sector and the main country.

Answer 7

Supplementary Information Required by the IASB