Notes to accounting statements are an important part of accounting statements, which are supplementary explanations and detailed explanations for the contents and items that cannot or are difficult to fully express in the accounting statements themselves. The reason for editing this paragraph is to compile the notes to the accounting statements. First of all, it expands the content of enterprise financial information, breaking the definition that the contents of the three main statements must conform to the accounting elements, and at the same time meet the limitations of relevance and reliability. Secondly, it breaks through the limitation that revealing items must be measured in money. Thirdly, it fully meets the requirement that enterprise financial report provides information helpful to economic decision-making for its users and enhances the understandability of accounting information. Finally, it can improve the comparability of accounting information. For example, by revealing the reasons for the change of accounting policies and the influence afterwards, the differences of accounting information in different industries or different enterprises in the same industry can be more comparable, thus facilitating comparative analysis. Edit the content of this paragraph. It is an explanation of the basis, basis, principles and methods and main items of accounting statements in order to facilitate users to understand the contents of accounting statements. Generally speaking, the notes to accounting statements should at least include the following contents: (1) explanations that do not conform to accounting assumptions; (2) Important accounting policies and accounting estimates and their changes, reasons for changes and their impact on financial status and operating results; (3) explanation of contingencies and events after the balance sheet date; (4) Description of related party relationships and their transactions; (5) Description of the transfer and sale of important assets; (6) Description of enterprise merger and division; (7) Major investment and financing activities; (8) The explanation of important items in accounting statements is helpful to understand and analyze other matters that need to be explained in accounting statements. Editing the preparation form of this paragraph The preparation forms of the notes to the accounting statements are flexible and diverse, and there are five common ones: 1. Notes to the endnotes: This is the main preparation form of the notes, which is generally suitable for items with more explanations; 2, parenthesis: this form is often used to provide supplementary information for the main body of accounting statements, because it directly incorporates supplementary information into the main body of accounting statements, so it is more intuitive than other forms, and it is not easy to be ignored. The disadvantage is that it contains too short content; Notes to accounting statements 3. Allowance accounts and additional accounts: setting up allowance and additional accounts and listing them separately in accounting statements can provide more meaningful information for users of accounting statements. At present, this form mainly refers to the setting of accounts such as bad debt provision; 4. Footnote Notes: Notes at the bottom of statements, for example, notes on discounted commercial acceptance bills and the original fixed assets of financial lessors included in the original fixed assets; 5. Supplementary explanation: Some detailed data and analysis materials that cannot be included in the main body of accounting statements can be explained in a separate supplementary statement. For example, supplementary statements can be used to reveal the relationship and transactions of related parties. At present, there is no unified view on what contents should be included in the notes of accounting statements when editing the notes in this paragraph. Generally speaking, the notes to traditional statements include five aspects: 1. The general situation of the enterprise: including the general situation of the enterprise, business scope and enterprise structure, etc. If necessary, it can also explain the divestiture of assets during listing and reorganization; Report editing technology 2. Accounting policies of enterprises: including accounting system, accounting period, bookkeeping principle, valuation basis, profit distribution method, etc. For enterprises that need to prepare consolidated statements, the preparation method of consolidated statements should also be explained; For enterprises whose accounting policies have changed compared with the previous year, the situation, reasons and influence on the financial status and operating results of the enterprise should be explained; 3. Notes to major items of accounting statements: including detailed descriptions of major items of accounting statements, such as the aging analysis of accounts receivable, the explanation of abnormal changes of reporting items and their causes, etc. 4. Information by industry: If the operation of the enterprise involves different industries, and the industry income accounts for more than 1% (including 1%) of the main business income, relevant data by industry shall be provided; 5. Disclosure of important matters: mainly including explanations of commitments, contingencies, matters after the balance sheet date and related party transactions. With the increasing complexity of the contents of statements, the following information will be further added to the contents of notes to accounting statements expressed by words supplemented by numbers: (1) Important information that helps to understand financial statements; (2) Information compiled on a different basis from the report; (3) Information that can be reflected in the statements but disclosed in other parts for reasons of effective communication; (4) statistics used to supplement the report information. Edit this paragraph to analyze the impact of tax relief on profits. The main business taxes and surcharges that listed companies need to bear will affect the main business profits, and other taxes will also affect the net profit. Preferential tax policies of listed companies will cause changes in tax paid in each year, and investors should analyze this to find out the dependence of corporate profits on tax relief. We should also pay attention to the changes of preferential tax policies and consider whether the withdrawal of preferential income tax relief will have a significant impact on total profits. Analyze the influence of subsidiaries on total profits. A listed company can have multiple subsidiaries and affiliated enterprises, and each subsidiary has different influence on the profit contribution and profitability of the head office. By analyzing the basic situation of subsidiaries and affiliated enterprises of listed companies, we can find out the subsidiaries and affiliated enterprises that have great influence on the company's business activities and profitability, and make key investigations and analysis. Contingencies in the notes to accounting statements indicate that contingencies are a state formed by past transactions or events, and their results must be confirmed by the occurrence or non-occurrence of uncertain events in the future. Common contingencies include endorsement, transfer or discount of commercial paper, pending litigation, pending arbitration, product quality assurance, etc. Contingencies can be divided into contingent liabilities and contingent assets: if contingent liabilities are confirmed as liabilities, expenses need to be confirmed, and if they are not confirmed as liabilities, only relevant explanations need to be made; Contingent assets are not recorded in income. However, when a contingent liability is recognized as a liability, the recognized expenditure is only an estimated value, and it is not necessary to disclose the amount when it is not recognized as a liability. Investors need to estimate the possibility and amount of the contingent event. Editing Notes to this Paragraph Notes to Accounting Statements The notes to the annual accounting statements of an enterprise shall at least disclose the following contents. If there are other provisions in laws, administrative regulations and the unified national accounting system, those provisions shall prevail: (1) explanation of non-compliance with accounting preconditions; (2) explanation of important accounting policies and accounting estimates; (3) explanation of changes in important accounting policies and accounting estimates, and explanation of correction of major accounting errors, mainly including the following items: 1. 2. The impact of changes in accounting policies; 3. Reasons why the cumulative impact number cannot be reasonably determined; 4. Contents and reasons for changes in accounting estimates; 5. The impact of changes in accounting estimates; 6. Reasons why the impact of changes in accounting estimates cannot be reasonably determined; Notes to accounting statements 7. Contents of major accounting errors; 8. The amount of correction for major accounting errors. (IV) Description of contingencies 1. Types and effects of contingent liabilities, including: (1) contingent liabilities formed by discounted commercial acceptance bills; (2) Contingent liabilities arising from pending litigation and arbitration; (3) Contingent liabilities formed by providing debt guarantee for other units; (4) Other contingent liabilities (excluding those that may cause economic benefits to flow out of the enterprise); (5) The expected financial impact of contingent liabilities (if it cannot be predicted, the reasons shall be explained); (6) Possibility of compensation for contingent liabilities. 2. If contingent assets are likely to bring economic benefits to the enterprise, the reasons for their formation and their financial impact shall be explained. (5) The description of matters after the balance sheet date shall explain the contents of non-adjustment matters such as the issuance of stocks and bonds, huge investment in an enterprise, asset losses caused by natural disasters and large changes in foreign exchange rate, and estimate the impact on financial status and operating results; If it is impossible to make an estimate, the reasons should be explained. (VI) Description of related party relationship and its transactions 1. If there is a control relationship, if the related party is an enterprise, regardless of whether there are transactions between them, the following items should be explained: (1) The economic nature or type, name, legal representative, place of registration, registered capital and its changes of the enterprise; (2) the main business of the enterprise; (3) Shares or interests held and their changes. 2. In the case of a transaction between an enterprise and a related party, the enterprise shall explain the nature of the related party relationship, the transaction type and its transaction elements, which generally include: (1) the amount of the transaction or the corresponding proportion; (2) the amount of unsettled items or the corresponding proportion; (3) Pricing policy (including transactions with no amount or only nominal amount). 3. Related party transactions should be explained separately by related parties and transaction types. Related party transactions of the same type can be combined without affecting the correct understanding of users of accounting statements. 4. If the transaction price of related parties is higher or lower than the general transaction price, the fairness of the price shall be explained. (VII) Description of transfer and sale of important assets (VIII) Description of merger and division of enterprises (IX) Description of important items in accounting statements, including: 1. Accounts receivable (excluding notes receivable, the same below) and the method of provision for bad debts (1) Explain the recognition standard of bad debts, the method and proportion of provision for bad debts, and focus on the following matters: ① The provision for bad debts is fully accrued this year, or the proportion of provision for bad debts is relatively high. ② If the provision for bad debts has been fully accrued in previous years, or the provision for bad debts has a large proportion, but it has been fully or partially recovered in this year, or recovered by other means such as reorganization, the reasons, the reasons for the original estimated provision ratio and the rationality of the original estimated provision ratio shall be explained; (3) The reasons why some accounts receivable with a large amount are not provided with bad debt reserves, or the proportion of bad debt reserves is low (generally 5% or less); (4) The accounts receivable actually written off this year and their reasons, among which the accounts receivable generated from related transactions actually written off should be disclosed and edited separately. The notes to the problematic accounting statements in this paragraph are not generated in the securities market, but they will be gradually improved with the further prosperity of the securities market. It can be said that the more the securities market develops, the higher the requirements for the preparation of notes to accounting statements will be. At present, China's securities market is still in its infancy, and there are still many problems, mainly including the following aspects: 1. Insufficient information disclosure: the sufficient expression is the key to the due effectiveness of the notes. Looking at the current disclosure situation in China, we can find that it is very unsatisfactory. For example, for the disclosure of related party transactions, some enterprises "cut the complexity and simplify it" and deliberately avoid it; Some enterprises "point to the end", vague. Many enterprises lack or even blank the disclosure of their main investors, key management personnel and their close family members. 2. The content of notes lags behind: some enterprises deliberately lag behind the content. For example, the disclosure of contingencies, guarantees and other contents that need to be announced in time is intentionally postponed; Some enterprises are unintentional, which also causes information lag. It may also be mainly because the quality of enterprise management and accounting personnel needs to be improved. At that time, they failed to correctly understand what should be disclosed in the notes, resulting in afterwards disclosure. 3. There is false information: the false information in the notes is difficult for outsiders to find in time, so it is easy to be misled and make wrong decisions, thus causing certain economic losses. For example, many enterprises have made false statements about important matters. China Hi-Tech before 1997, Ningbo Huatong and Youzang Shengdi in 1999 were all punished by the CSRC for false information disclosure. Editing this paragraph to solve the problems in the preparation of accounting statements, we should take all-round and multi-level governance from the perspective of system personnel to improve the quality of the preparation of accounting statements. First of all, we should improve the relevant laws and regulations. On the one hand, China's accounting standards and accounting system should be constantly improved, especially for those new problems encountered in practice; On the other hand, enterprises should be prevented from taking advantage of the optional loopholes in accounting policies through internal audit or a certain supervision mechanism, and the scope of accounting policy selection should be limited for similar enterprises in the same industry. Secondly, we should strengthen the supervision system of information disclosure. The providers of notes to accounting statements should establish their own internal supervision mechanism, and the audit of certified public accountants should also be strengthened. The relevant government departments should strengthen supervision over this from the perspective of the whole society, and "take a three-pronged approach" instead of shirking their responsibilities among themselves. Finally, we must strengthen law enforcement. The new Accounting Law promulgated at the end of 1999 and the Securities Law promulgated before it have been hotly discussed about the perfection of its contents, but if it is not strictly enforced and implemented, it will not play a deterrent role. No matter how perfect the literal expression is, if the action is just a scratch, it can only be a temporary solution, and the future trouble will be endless. We should realize that the notes to accounting statements are a tool and a carrier of information. Its significance for economic decision-making is far-reaching. Understanding its meaning, learning its compilation and making better use of its form should be one of the secrets of success for business circles and investors.