What accounting principles does Chocolate Bash state are generally accepted in the United States of America?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
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 38)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, 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 that Chocolate Bash follows a standardized set of rules and guidelines when recording and reporting its financial data. This ensures consistency and comparability in financial reporting.
The independent audit report included in the FDD states that the financial statements of Chocolate Bash Franchising LLC present fairly, in all material respects, the financial position, results of operations, and cash flows for the specified periods in accordance with accounting principles generally accepted in the United States of America. The auditor's opinion confirms that the financial statements have been audited in accordance with auditing standards generally accepted in the United States of America (GAAS).
Furthermore, Chocolate Bash's summary of significant accounting policies clarifies that the company records revenue when earned and expenses when incurred, adhering to US GAAP. However, the FDD also notes a departure from these principles regarding depreciation methods for fixed assets. While US GAAP requires the straight-line method, Chocolate Bash uses accelerated depreciation methods for its tax return. The impact of this departure on the financial statements has not been determined, which could be a point of further inquiry for potential franchisees.