What basis of accounting does Belocal use in its financial reporting?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounting Policies
Basis of Accounting
The Company uses the accrual basis of accounting in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Under this method, revenue is recognized when earned and expenses are recognized as incurred.
Use of Estimates
The preparation of the financial statements and accompanying notes in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates, among others, are used for the revenue recognition and income taxes. Actual results could differ from those estimates.
Source: Item 23 — RECEIPTS (FDD pages 71–242)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the company uses the accrual basis of accounting. This is in accordance with accounting principles generally accepted in the United States (U.S. GAAP). Under the accrual method, Belocal recognizes revenue when it is earned and expenses when they are incurred, regardless of when cash changes hands.
This accounting method provides a more accurate picture of Belocal's financial performance over time compared to the cash basis of accounting, which only recognizes revenue and expenses when cash is received or paid out. The accrual method is standard practice for most established businesses and is required by U.S. GAAP for financial reporting purposes.
Belocal's FDD also notes that the preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates are used for revenue recognition and income taxes, among other things, and actual results could differ from those estimates. This is a standard disclosure, as all accounting methods require some level of estimation and judgment.