On what basis of accounting are Caring Senior Service's financial statements prepared?
Caring_Senior_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Revenues are recognized in the period in which they are earned. Expenses are recognized in the period in which they are incurred.
Source: Item 23 — RECEIPTS (FDD pages 53–204)
What This Means (2025 FDD)
According to Caring Senior Service's 2025 Franchise Disclosure Document, the financial statements are prepared using the accrual basis of accounting, following accounting principles generally accepted in the United States of America. This means that revenues are recognized when earned, and expenses are recognized when incurred, regardless of when cash changes hands.
For a prospective franchisee, understanding the basis of accounting is crucial for interpreting the financial statements provided in the FDD. The accrual method offers a more accurate picture of Caring Senior Service's financial performance over time compared to the cash basis, as it matches revenues with the expenses incurred to generate those revenues.
This accounting method is standard practice for most established franchisors, as it provides a more comprehensive view of the company's financial health. Franchisees can rely on these statements to assess the franchisor's profitability, stability, and overall financial management. However, it is important to note that in the event that there is significant uncertainty concerning the collectability of royalty revenues, Caring Senior Service recognizes royalty revenues when received.