Disclosure supplies information that helps readers understand financial statements, often through the notes. Notes explain accounting methods, components of balances, changes, uncertainty, and some items not recognized in statement totals.
For example, an equipment balance alone does not tell a reader which depreciation method was used. An accounting policy note can provide that information. A liability schedule can explain how a beginning balance changed through new obligations and payments.
Check the explanation against the records
For each required disclosure, identify the applicable requirement and the company facts needed to satisfy it. Obtain the contracts, schedules, or other support. Check the amounts, units, periods, and agreement with the statements.
A copied note can be inaccurate even if it was correct last year. Check whether the methods, transactions, and estimates still match its wording.
A note cannot replace a liability that the applicable accounting requirements say must be recognized. Conversely, some unrecognized items require disclosure. Research the two questions separately.
Put the concept to work
Understand this concept
- Explain how notes supplement statement totals with policies, disaggregation, assumptions, uncertainty, changes, and information about some unrecognized phenomena.
Analyze this concept
- Analyze a disclosure requirement by mapping each objective or paragraph to entity facts, source evidence, calculation support, location, cross-reference, and review control.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- FASB Accounting Standards Codification — Apply
To analyze this concept: Required. Required disclosures depend on scoped and effective authoritative paragraphs.
- Financial statement disclosure — Understand
To analyze this concept: Required. The map must preserve the different jobs of recognized-amount explanation, policy, risk, and unrecognized-item disclosure.
- Financial statement presentation — Understand
To understand this concept: Helpful. Disclosure and statement presentation form different but connected parts of the reporting package.
Lessons
Worked examples and cases
Practice
Common mistaken ideas
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More specific topics
- Accounting policy disclosure
- Accounting-change and error release control
- Accounting-change disclosure
Show 12 more more specific topics
- Cash-flow disclosure reconciliation
- Commitment disclosure
- Debt maturity disclosure
- Error-correction disclosure
- Expense disaggregation disclosure
- Intangible asset rollforward
- Inventory disclosure
- Lease presentation and disclosure
- Receivables and credit-loss disclosure
- Revenue disclosure
- Risks and uncertainties disclosure
- Segment disclosure
Related concepts
Show 6 more related concepts
Use this idea next
- Accounting policy disclosure — Understand
Required level here: understand. Required. A policy note is one disclosure job within a larger reporting package.
- Accounting-change and error release control — Understand
Required level here: understand. Helpful. Release includes the complete reporting artifact.
- Accounting-change disclosure — Understand
Required level here: understand. Required. The note is part of the financial statements, not a narrative afterthought.
Show 7 more next steps
- Cash-flow disclosure reconciliation — Understand
Required level here: understand. Required. The learner knows that notes are part of the reporting package.
- Financial statement disclosure — Analyze
Required level here: understand. Required. The map must preserve the different jobs of recognized-amount explanation, policy, risk, and unrecognized-item disclosure.
- Inventory disclosure — Understand
Required level here: understand. Required. The inventory note applies the broader disclosure information jobs.
- Lease presentation and disclosure — Evaluate
Required level here: analyze. Required. Lease disclosure is governed by an objective and material decision-useful information, not a checklist alone.
- Receivables and credit-loss disclosure — Understand
Required level here: understand. Required. The receivable note explains recognized amounts, policies, risk, and uncertainty.
- Revenue disclosure — Understand
Required level here: understand. Required. The revenue note extends recognized amounts with policies, changes, uncertainty, and disaggregation.
- Risks and uncertainties disclosure — Understand
Required level here: understand. Required. The learner must locate the note within the financial statements and distinguish it from other communications.
Used in these readings
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