NOTES TO THE FINANCIAL STATEMENTS

Financial Statements are the end products of the accounting process, which reveals the financial results
of the specified period and financial position as on particular date. It is the basic and formal annual
report through which a business communicates financial information to its various user groups.

Financial statement notes are the 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. They help
different types of users, such as financial analysts and investors, to interpret all the numbers added to
the financial statements.

When conducting an audit of the financial statements, the auditor conducts a thorough investigation of
all the information contained in the financial statements, including the notes to the financial statements.
Auditors use the notes to determine if the accounting policies used are appropriate, properly applied,
and are reflected in the reported results of the company.

The notes may also provide information on underlying issues relating to the overall financial health of
the company. The auditor bases his audit opinion on the financial statement numbers, as well as the
notes to the financial statements.

1.) General Information – explain briefly

2.) Compliance - When conducting an audit of the financial statements, the auditor conducts a
thorough investigation of all the information contained in the financial statements, including the
notes to the financial statements. Auditors use the notes to determine if the accounting policies
used are appropriate, properly applied, and are reflected in the reported results of the
company. The notes may also provide information on underlying issues relating to the overall
financial health of the company. The auditor bases his audit opinion on the financial statement
numbers, as well as the notes to the financial statements.
3.) Basis of Accounting – This section in the financial statement notes explains the basis of
preparing and presenting the key financial statements.
4.) Financial Assets
CASH AND CASH EQUIVALENTS
INVENTORIES
INVESTMENT PROPERTY