What accounting principles must Bombs Away's financial statements adhere to?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). As a result, the Company records revenue when earned and expenses when incurred. The Company has adopted the calendar year as its basis of reporting.
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 the disclosures of contingent assets and liabilities and other items, as well as the reported revenues and expenses.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 Bombs Away FDD, the company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, also known as US GAAP. This means Bombs Away recognizes revenue when it is earned and expenses when they are incurred, and the company uses the calendar year as its reporting basis.
US GAAP requires Bombs Away's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent items, and reported revenues and expenses. Actual results could differ from these estimates. The auditor's report included in the FDD states that the financial statements present fairly the financial position of Bombs Away as of December 31, 2023, in accordance with US GAAP.
For a potential Bombs Away franchisee, this indicates that the financial statements included in the FDD are prepared using a standardized and widely recognized set of accounting rules. This allows for easier comparison with other companies and provides a level of assurance that the financial information is presented fairly. Franchisees may want to consult with a financial advisor to fully understand the implications of these accounting principles for their own business decisions.