What is the purpose of notes to the financial statements?

The purpose of notes to the financial statements is to provide additional detail about specific accounting policies and figures. These notes are essential for enhancing the understanding of the financial statements by explaining the context, assumptions, and methodologies used in preparing the accounts. They elaborate on various items reported in the financial statements, such as the basis of measurement, accounting policies applied, and how certain figures are derived. This level of detail ensures transparency and helps users of the financial statements, including investors and analysts, to assess the organization's financial health and performance with a clearer context.

Regarding the other choices, the primary financial summary is actually represented by the financial statements themselves—such as the balance sheet, income statement, and cash flow statement. While comparing performance with previous years is an important aspect of financial analysis, it is typically done through comparative financial statements rather than through notes. Outlining future financial projections, while a critical part of financial planning, generally falls outside the scope of standard financial statements and notes, which focus on historical data. Therefore, the role of notes is to clarify and expand on the information presented in the core financial statements rather than to serve these other functions.