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Therefore, any type of contingent liability should be disclosed in the footnotes to the financial statements to give a clear idea of the liability which may or may not arise.

The notes to the financial statements communicate information necessary for a fair presentation of financial position and results of operations that is not readily apparent from, or not included in, the financial statements themselves.

A company's balance sheet, also known as a "statement of financial position," reveals the firm's assets, liabilities, and owners' equity (net worth). The balance sheet, together with the income statement and cash flow statement, make up the cornerstone of any company's financial statements.

[The information given in a footnote includes the author, the title, the place of publication, the publisher, the date of publication and the page or pages on which the quotation or information is found.]

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.

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.

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.

Any information that is needed to clarify or add additional detail to a financial statement will be found in the footnotes. Examples can include unexpected changes from the previous year, required disclosures, adjusted figures, accounting policy, etc.