On what basis of accounting are Chatime's financial statements prepared?

According to Chatime's 2025 Franchise Disclosure Document, the company's financial statements are prepared using the accrual basis of accounting. This method adheres to accounting principles generally accepted in the United States of America (U.S. GAAP).

The accrual basis of accounting recognizes revenues when earned and expenses when incurred, regardless of when cash changes hands. This approach provides a more accurate picture of a company's financial performance over a specific period compared to cash basis accounting, which recognizes revenues and expenses only when cash is received or paid.

Furthermore, Chatime's financial statement preparation requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities. These estimates are subject to change based on future economic, industry, or financial conditions, and actual results could differ. This is a standard practice in accounting, acknowledging the inherent uncertainties in predicting future outcomes.