Chapter 24, Problem 1Q

To determine

Introduction: Notes to financial statements can be the information which is left out from the balance sheet and income statement provided in the financial statements in the form of a note.

To identify: To identify the major advantages of notes to the financial statements and the types of items that are usually reported in note.

Explanation of Solution

Major advantages of notes to the financial statements are as follows:

1. 1) Additional information related to specific financial statements can be qualitatively explained, or to expand the information on the financial statements supplementary data of the quantitative information can be provided.
2. 2) Explanation on basic contractual agreements.

Types of items reported in footnote are as follows:

1. 1) Accounting methods used are disclosed
2. 2) Contingent assets and liabilities are disclosed
3. 3) Creditors claimed is examined
4. 4) Equity holder claims
5. 5) Executors commitments

Conclusion

Above presented are the advantages of notes and the types of items usually reported in a note.