Notes which provide clarification and additional information about specific items in the statement of income (P&L), statement of cash flows, and the statement of financial position. These notes are necessary disclosures that explain the amounts reported on the financial statements, in order to better cater to the needs of the users of these statements. Examples of the areas covered by explanatory notes include disclosure of subsequent events (after the close of the accounting period), intangibles (e.g., determination of the value of intangible assets), consolidation (aggregation of financial statements of a group company), contingencies (contingent liabilities), asset depreciation (methods, calculations, etc.), significant accounting policies, and so on.

Explanatory notes form an integral part of the financial statements of an entity.

Interchangeably, notes (or notes to financial statements), footnotes, or explanatory notes are used to denote the same meaning.