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In double-entry bookkeeping, every account — whether it’s cash, accounts payable, wages payable, or another type — has a debit and credit side; an entry on one side is balanced by a corresponding entry on the other. Footing is an essential step in the accountant’s ultimate goal, which is to balance the accounts. When you foot the columns on one side, the sum must match the foots on the other. If there is no match, then the columns “don’t foot,” meaning either the math or one or more of the entries are in error. In the following table crossfooting means adding 121 + 176 + 66 to be certain that its total of 363 is equal to the total or sum of the “Total” column’s 363. We will use the table below to illustrate the meaning of crossfoot or crossfooting.

It is important, as an accountant or bookkeeper, to understand what certain terms mean so that you can perform the correct function. It is also important as a manager or investor to know what functions correspond to certain words, so that you know what to ask of your employees and to understand when reviewing financial statements and reports. Often, the footnotes will be used to explain how a particular value was assessed on a specific line item. This can include issues such as depreciation or any incident where an estimate of future financial outcomes had to be determined. This can include further details about items used as a reference, clarification of any applicable policies, a variety of required disclosures, or adjustments made to certain figures. Next, all of the debits in the debit column are totaled while all of the credits are totaled as well.

What Are Footnotes to Financial Statements? Types and Importance

This information can then inform marketing strategies, inventory management, and resource allocation. The term “footing” originated from the practice of writing the final sum at the foot or bottom of a column. This visual representation made it easier for accountants to quickly reference and comprehend the totals. While the advent of modern accounting software has made footings less apparent in physical documents, the concept still holds immense significance in the digital age.

In a balance sheet, footings are vital for showcasing the assets, liabilities, and equity of a company. By summing up the values in the asset and liability columns, footings provide a comprehensive view of the company’s financial position at a specific point in time. This facilitates analysis and decision-making related to liquidity, solvency, and overall financial health. It is important for analysts and investors to read the footnotes to the financial statements included in a company’s interim and annual reports. Footnotes also explain in detail why any irregular or unusual activities such as a one-time expense has occurred and what its impact may be on future profitability. In conclusion, footings play a fundamental role in accounting, enabling concise data presentation, streamlined analysis, and informed decision-making.

1. Footnotes also explain in detail why any irregular or unusual activities such as a one-time expense has occurred and what its impact may be on future profitability.
2. We can see below that Macy’s reported a credit balance of $3,800 for inventory in the period.
3. As business transactions are recorded, accountants enter the amounts for each type of transaction in one of two columns.
4. The account balance is the amount that’s carried over to the financial statements.

Types of Footings

Each inventory transaction is recorded during the period in its respective column—whether it was a debit or credit to the inventory account. In sales analysis, footings can be used to calculate and compare the total sales for different products, regions, or time periods. By totaling the sales figures, footings enable decision-makers to identify the highest-selling products, identify growth opportunities, and analyze sales trends.

The debit and credit columns are summed, whereby the total of each column is a footing. Incorporating footings in accounting practices enhances the efficiency, accuracy, and understanding of financial information. It empowers accountants, managers, and stakeholders with summarized and organized data, facilitating effective analysis, reporting, and decision-making processes. In an income statement, footings are used to calculate and present the total revenue, total expenses, and ultimately, the net income. By totaling the revenue and expense columns, footings provide a clear picture of the company’s financial performance during a specific period.

Understanding Footnotes to the Financial Statements

She has bachelor’s degrees in political science from North Carolina State University and in accounting from University of Phoenix. Aldridge is completing her Certified Financial Planner designation via New York University. We can see below that Macy’s reported a credit balance of $3,800 for inventory in the period.

Definition of Crossfoot or Crossfooting

For example, descriptions of upcoming new product releases may be included, as well as footing in accounting issues about a potential product recall. To check the extensions on a purchase invoice means to verify that the number of units of each item multiplied by its unit cost agrees with the total dollar amount for each item. For example, if 15 units of Item Q have a per unit cost of $5, the total cost for Item Q should be $75. Christine Aldridge is a financial planner who has been writing articles related to personal finance since 2011.