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The footnotes to your company's financial statements give investors and lenders insight into account balances, accounting practices and potential risk factors ? knowledge that's vital to making well-informed business and investment decisions.

Footnotes may provide additional information used to clarify various points. This can include further details about items used as a reference, clarification of any applicable policies, a variety of required disclosures, or adjustments made to certain figures.

What Are Footnotes? Pick up any financial report and you'll always find references to the footnotes of the financial statements. The footnotes describe in detail the practices and reporting policies of the company's accounting methods and disclose additional information that can't be shown in the statements themselves.

The exact nature of these footnotes varies, depending upon the accounting framework used to construct the financial statements (such as GAAP or IFRS). Footnotes are an integral part of the financial statements, so you must issue them to users along with the financial statements.

Footnotes are mainly used by analysts reviewing the financial statements to give them a much more detailed and comprehensive outlook on the company's financial situation. It helps the analysts understand the accounting policies and how they might affect the company's underlying financial health.

Comprehensive footnote disclosures, which are found at the end of reviewed and audited financial statements, provide valuable insight into a company's operations. Unfortunately, most people don't take the time to read footnotes in full, causing them to overlook key details.

Financial statement footnotes are supplemental notes that are included with the published financial statements of a company. The notes are used to explain the assumptions used to prepare the numbers in the financial statements as well as the accounting policies adopted by the company.

Below are a few examples of required disclosures that are oftentimes not considered, but are required for financial statements to be in ance with GAAP. Contingencies. ... Related-party transactions. ... Accounting changes. ... Risks and uncertainties.