Footnotes to the financial statements provide additional information and clarification on items presented in the balance sheet, income statement and cash flow statement.
Footnotes present required disclosures, accounting methodologies used, any modifications to methodologies from prior reporting periods, and forthcoming transactions that may affect future profitability.
Footnotes are important to investors and other users of financial statements as they can reveal problems with a company’s financial condition.
Accrual accounting is a method of accounting in which revenue or expenses are recorded at the time of the transaction, and not at the time the payment is received or made.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
Adjusting journal entries are used to record transactions that have occurred but have not yet been properly accounted for in accordance with the accrual basis.
The annual report is a corporate document distributed to shareholders, which sets out the financial position and activities of the company for the previous year.
An asset is a resource with economic value that is owned or managed by an individual, corporation or country with the expectation that it will provide benefits in the future.