Muqatil bin Hayyan said that this Ayah was revealed about the voluntary charity. The Ayah means, `They ask you (O Muhammad ) how they should spend,' as Ibn `Abbas and Mujahid have stated. So, Allah explained it for them, saying:
(Say: "Whatever you spend of good must be for parents and kindred and orphans and Al-Masakin and the wayfarer,") meaning, spend it on these categories or areas. Similarly, a Hadith states (that those who deserve one's generosity the most, are):
(Your mother, father, sister, brother, the closest and then the farthest (relatives).)
Maymun bin Mihran once recited this Ayah (2:215) and commented, "These are the areas of spending. Allah did not mention among them the drums, pipe, wooden pictures, or the curtains that cover the walls."
Next, Allah said:
(...and whatever you do of good deeds, truly, Allah knows it well.) meaning, whatever you perform of good works, Allah knows them and He will reward you for them in the best manner, no one will be dealt with unjustly, even the weight of an atom.