Examples of Notes or Assumptions to the Financial Statements

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NOTES TO THE FINANCIAL STATEMENTS:

Notes to the financial statements are developed for existing businesses as well as proposed businesses. The Notes summarize or explain specific areas of a company's financial statements. The purpose of developing these notes is to reduce any confusion a reader may have when reading financial statements.

Most existing business owners have an accountant develop their notes when preparing the company's financial statements. Aspiring entrepreneurs, on the other hand, who forecast their own financial statements, are required to develop their own notes. Such notes are called "Notes to the FORECASTED Financial Statements". Notes to the Forecasted Financial Statements will be our main focus in this section.

Notes to the Forecasted Financial Statements summarize the "activities" and "assumptions" made in creating the forecasted financial statements. These Forecasted Notes will equip the readers (bankers, investors, and other readers) with the necessary information needed to understand and comprehend your forecasted financial statements. In other words, they alleviate any guessing or questions a reader may have when reading the financial section of the business plan.

NOTE: never, ever, ever, create the notes to the forecasted financial statements until you have" fully completed" all forecasted financial statements and analysis.

There is no set structure nor specific guideline that depict which topics should be included in the notes to the forecasted financial statements. Rather it's left up to the individual to decide which item warrants a "note" and which item is considered self explanatory.  The following list provides some suggestions you may use when creating your notes to the forecasted financial statements.

Possible Notes to the Forecasted Financial Statements:
 
Sales Forecast note to the financial statements
Gross Margin note to the financial statements
Management and Staff note to the financial statements
Office or Store Supplies note to the financial statements
Bad Debt Expense note to the financial statements
Marketing Expenses Breakdown note to the financial statements
Income Tax Rate notes to the financial statements
Income Tax Payable note to the financial statements
Net Income note to the financial statements
Accounts Receivable note to the financial statements
Personal Assets Invested by the Owner note to financial statements
Fixed Asset Purchases note to the financial statements
Deprecation Rates on Fixed Assets note to the financial statements
Inventory note to the financial statements
Accounts Payable note to the financial statements
Short-term Loans note to the financial statements
Long-term Debt (mortgages) note to the financial statements
Sales Tax note to the financial statements
Owner (s) Capital Account note to the financial statements
Retained Earnings note to the financial statements

 

The following links explain and provide an example for each note listed above.  Each example (note) is independent of one another and should be treated as such. Following this section, you will find the complete "Notes to the Forecasted Financial Statements" for J&B Incorporated, Scholarship Information Services, and The Internet Company.

 

This concludes our discussion on possible notes to the forecasted financial statements. Below provides three examples of the "Notes to the Forecasted Financial Statements" section of a business plan.

 
Examples of Notes to the Forecasted Financial Statements

J&B Incorporated
Scholarship Information Services
The Maple Syrup Company

Categories: Financial