What is the primary purpose of the 'Notes to the Financial Statements'?

The primary purpose of the 'Notes to the Financial Statements' is to provide supplementary information and context for understanding the financial statements. This additional information helps users, such as investors, creditors, and analysts, interpret the figures presented in the financial statements more accurately. The notes may include explanations of accounting policies, details about specific financial statement items, contingencies, and other contextual information that is crucial for making informed decisions.

Understanding financial statements in isolation may not provide a complete picture of an organization's financial health. Therefore, the notes are critical as they help clarify the assumptions made during the reporting process, the rationale for specific accounting methods, and any additional details that affect the overall financial position.

While summarizing financial transactions or focusing solely on the income statement might provide certain information, it would not offer the comprehensive context necessary for complete analysis. Preparing tax returns is related to tax accounting and not directly linked to the primary function of the notes, which is to enhance the transparency and understanding of the financial statements.