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In other words, the statements should offer any explanation that is needed to keep them from being misleading. Explanatory notes are considered an integral part of the financial statements. For instance, a change from one accounting procedure to another should be reported. In general, the form of the financial statements can affect their usefulness in making certain decisions. For example take the section of liabilities on a company's financial statements. If a company has large amounts of notes payable, an explanatory note may disclose the balances, maturities, interest rates, and other features of the debts...
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