Read the notes to the financial statements without paging through all of them
The notes to the financial statements, often called footnotes, usually run longer than the statements themselves. They say how each figure was measured, break totals into their parts, and disclose items that never reach the balance sheet, such as pending lawsuits. Ask Search+ "What does the revenue note say about contracts that span several periods?" and the answer cites the note so you can read it in full.
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Last updated October 2026
How to read financial statement notes with Search+
- Upload the whole set, not just the primary statements
Notes refer to each other and to the face of the statements, so add the complete set, the PDF or the Excel version, whichever you were given. Last year's statements in the same workspace help when you want to know which disclosures are new.
- Ask about a note by its topic
Note numbers differ from one company to the next, so ask by subject, such as income taxes, leases or segment information, rather than by number. Ask about measurement and about amounts as separate questions.
- Trace the line item back to its note
Face statements often say "see Note 9" beside a line. Ask what that note says about the line, then open the citation to read the explanation the company gave.
Questions to ask about the notes
What does the significant accounting policies note say about how revenue is recognized and how inventory is valued?
Which areas does the company name as involving significant estimates, and what assumptions does it describe for each?
What legal claims or guarantees are disclosed, and has the company recorded any amount for them or only described them?
What does the income tax note say about deferred tax assets and any valuation allowance against them?
Do the notes discuss the company's ability to continue as a going concern, and what plans does management describe?
Which notes in this year's statements cover topics that last year's statements did not?
What to look for in the notes
Notes usually open with the nature of the business and the basis of preparation, then the significant accounting policies, followed by notes on individual items such as revenue, property, leases, debt, taxes and equity, and close with commitments, contingencies and subsequent events.
The accounting policies note says how the company recognizes revenue, values inventory, depreciates assets and accounts for leases. A change in policy can move figures between years without any change in the business.
Lawsuits, guarantees and some commitments are described in the notes but may not be recorded as liabilities. Reading only the balance sheet misses them.
This note covers events between the balance sheet date and the date the statements were issued, such as a refinancing, an acquisition or a major loss. It often says something the period figures cannot.
Search+ finds relevant passages by meaning, so a question about warranty costs can reach a note titled provisions. Each answer cites the excerpt, and you can open it to read the note.
Wording you may see in the notes and what to ask next
| Wording you may see | What it usually signals | A follow-up question |
|---|---|---|
| "The accompanying notes are an integral part of these financial statements" | The notes are part of the audited set, not an extra | Which notes explain the largest balance sheet items? |
| "Summary of significant accounting policies" | How figures are measured and recognized | Did any policy change this year, and what effect is described? |
| "Use of estimates" | Areas where management judgment drives the numbers | Which estimates does the company say are most sensitive? |
| "Commitments and contingencies" | Obligations and claims that may not be on the balance sheet | Which contingencies are described, and is any amount recorded? |
| "Recently issued accounting standards" | New rules that may change future statements | What effect does the company expect from standards not yet adopted? |
| "Subsequent events" | Events after the period end | What happened after year end, and is any amount given? |
| "Substantial doubt" | Going concern uncertainty | What conditions and management plans are described? |
What are the notes to the financial statements?
The notes are the written disclosures that accompany the primary financial statements. They explain the accounting policies used, break figures into their components, and disclose risks, commitments and events that the statements alone do not show. They form part of the statements an auditor reports on.
Questions about financial statement notes
Can Search+ find the right note when I do not know its number?
Will it pick up a lawsuit that is only mentioned in the notes?
Can it tell me which accounting policies changed this year?
Does it summarize all the notes at once?
Is its reading of the notes accounting or investment advice?
The detail is in the notes
Start a workspace, upload the full statements, and ask about the notes behind the figures you rely on.
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