Dictionary / Footnote
What does Footnote mean in accounting?
Quick definition
Financial reporting(appended to a financial statement) A medium for imparting additional information, usually a narrative, indexed to a particular item. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
Read more below
Examples
A note indexed to the inventory line
You run a bicycle shop. On January 14, a credit union asks for December 31 statements before it will raise your seasonal line. The balance sheet shows inventory of $118,600 with a small 2 next to the line. Note 2, appended to the statements, says you value merchandise at the lower of cost or market using FIFO and that the $118,600 is finished goods on the floor. The credit union reads that narrative with the inventory line; a QuickBooks Online register memo never reaches them.
The face hides the remaining lease
You are selling your cabinet shop. On November 12 a buyer reviews the October 31 package and sees no lease liability on the balance sheet, only $4,100 of rent on the P&L. The face looks like you can walk away next month. Note 4, indexed to rent, lists the remaining seven years on the shop lease with the landlord at $4,100 a month, about $344,400 still owed. Without that footnote the buyer understates the occupancy commitment, so keep the remaining term after the statements, not as a dummy payable in QuickBooks Online.
Why it matters
You need this word because a financial statement prints totals, not the story behind a line. A footnote is the narrative you append to that package, usually indexed to one item, so a lender, buyer, or CPA can read the extra fact with the number it belongs to. You will not write one most months. Notes show up when you assemble a year-end package, a loan file, or a sale packet. If you skip them, a reader can treat the face totals as complete. If you drop the same text into a Word footnote or a journal entry memo, it never travels with the statements. Keep the explanation after the reports, pointed at the line it explains, and keep the books for amounts you actually recorded.
Further reading
Compare this term with reference material from other accounting and finance websites.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
Receipt CaptureThe 7 Best Receipt Capture Tools for Small BusinessThe 7 best receipt capture tools for small business, ranked: OCR accuracy, QuickBooks and Xero sync, real pricing, and honest tradeoffs for each pick.Updated August 9, 2026Frequently asked questions
What is Footnote in bookkeeping?
(appended to a financial statement) A medium for imparting additional information, usually a narrative, indexed to a particular item.
When should I use Footnote?
Use Footnote when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Footnote?
Footnote is used for footnote entries, while F.O.B covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.