Question

1. What are explanatory notes and why are they required? Discuss in 80–100 words.

2. Why is it important that financial statements and reports are clear and conform to organisational and statutory requirements? Discuss in 120–150 words.

3. Describe (120–150 words) the information which will be contained in typical financial reports. Provide six examples.

Thank you

Answer 1

Answer for 1)

Explanatory notes contain the information's that cannot be communicated by the managers through numbers and also the information that is needed in support of that numbers. Hence those details provide the users of such financial statements why certain things happened and also how did the Managnet of such organisation tackle such situation which helps the users of financial statements to evaluate the performance of the organisation.

Answer for 2)

It is important for the financial statements and reports should be clear and conform with statutory and organisational requirements for enabling the user to study it,evaluate the trueness of the situation and taking necessary decision maling .Here the users refers to investors for analysing their portfolio,the lenders for degree of safety,the Shareholders to get assured that their funds are used for the purpose for which they raised for and also the government for determining the tax and other legal fees and penalties.

Answer for 3)

The information that is to be contained in typical financial statements are results of operations,any event or transaction having significant Nature,size and incidence and the details about the net worth of the organisation.Some of the examples:

1)Profit or loss of operations during the year.

2)Occurance of loss due to accident or natural calamities and insurance claim if any received for such ocvurance.

3)Purchase or sale of assets.

4)Loans obtained during the period.

5)Capital raised and buy back of shares if any during the period.

6)Legal suits if any filed by or filed against the organisation.