What accounting principles were used in preparing Bb.Q Chicken's financial statements?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
cial Statements December 31, 2024 and 2023
Basis of presentation:
The accompanying financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (US" GAAP").
Use of Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant estimates include an allowance for doubtful accounts, inventory valuation and obsolescence, valuation and recoverability of long-lived assets including property and equipment, and income taxes. On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
Cash and Cash Equivalents:
Cash and cash equivalents include cash on hand. The company maintains cash in depository accounts at the FDIC insured banks.
Accounts Receivable:
Accounts receivable is presented on the balance sheet net of estimated uncollectible amounts. The Company analyzes the customer creditworthiness, accounts receivable balances, payment history, payment terms, and historical bad debt levels when evaluating the adequacy of its allowance for doubtful accounts.
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
According to Bb.Q Chicken's 2025 Franchise Disclosure Document, the company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP). This means that Bb.Q Chicken adheres to a standardized set of guidelines and practices when reporting its financial performance and position. These principles ensure consistency and comparability in financial reporting, which is crucial for potential franchisees to understand the financial health and stability of the company.
In addition to adhering to US GAAP, Bb.Q Chicken's management is responsible for making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates are based on historical circumstances, available information, and reasonable assumptions. Key estimates include allowances for doubtful accounts, inventory valuation, the valuation and recoverability of long-lived assets, and income taxes. These estimates are regularly reviewed and adjusted as necessary to reflect current conditions.
Furthermore, the consolidated financial statements include the accounts of Bb.Q Chicken and all its subsidiaries that are more than 50 percent owned or considered variable interest entities under US GAAP. All inter-company transactions and profits are eliminated during the consolidation process. The financial statements are audited by an independent auditor, who expresses an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of Bb.Q Chicken in accordance with US GAAP. This audit provides an additional level of assurance to potential franchisees regarding the reliability of the financial information presented.