CFA Level I · CFA Level I Exam · Introduction to Financial Statement Analysis
Which of the following is the most appropriate description of the role of the notes to the financial statements in an analyst's work?
The notes explain the accounting policies, estimates and supporting details behind the reported amounts, helping analysts interpret and adjust the numbers. They are not a duplicate of the primary statements and do not replace management's narrative commentary.
- AThey duplicate the primary statements
- BThey explain policies, estimates and details behind reported amountsCorrect
- CThey replace the need for management commentary
Explanation
Notes disclose accounting policies, key estimates, and breakdowns that help analysts interpret and adjust reported figures. They do not merely repeat the statements, and they do not substitute for management commentary, which offers management's narrative view.
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