Various people \u2013 your employees, your suppliers, customers and investors, use your financial statements. They all have different expectations when it comes to the level of information given and details it\u2019s presented in.\u00a0<\/p>\n
When one thing that\u2019s important in determining what to enclose in more details and what not, is the level of \u201cmateriality\u201d, i.e. which classes of items are material (considering the size and nature of the item), another measurement point is the knowledge of the users. Question answered is \u201cHow much do I have to explain?\u201d<\/p>\n
Normally users of financial statements are assumed to have a reasonable knowledge of business, economic activities and accounting. This means that you don\u2019t have to explain something that\u2019s general knowledge when it comes to accounting, business and economic activities. Obviously something that\u2019s \u201cgeneral knowledge\u201d means information, which applies to other, companies as well, i.e. meaning of receivables or some financial ratio. Your company specific considerations or terms used should still be explained or defined to outside users, like investors, suppliers and customers.<\/p>\n
If you think about it, assuming that the users have some basic knowledge of the three things mentioned, it makes preparing the statements somewhat easier. You\u2019re writing to users you determined as the focus group and it makes writing and even thinking about level of information to present a lot easier. So always define your audience first.<\/p>\n","protected":false},"excerpt":{"rendered":"
Various people \u2013 your employees, your suppliers, customers and investors, use your financial statements. They all have different expectations when it comes to the level of information given and details it\u2019s presented in.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28,46],"tags":[],"class_list":["post-3902","post","type-post","status-publish","format-standard","hentry","category-4-reporting","category-4-1-annual-report"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t