What accounting standards were used to prepare the Cinch I.T. financial statements?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
d when earned rather than when cash is received, and certain expenses are recognized when the obligation is incurred rather than when the cash is disbursed.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash
Cash includes all cash balances and highly liquid investments with an initial maturity of three months or less.
Receivables - Trade
The Company carries its trade receivables at cost.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 60)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, the company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America, also known as GAAP. This means Cinch I.T. adheres to a standardized set of rules and guidelines when reporting its financial performance and position.
GAAP aims to ensure transparency and consistency in financial reporting, allowing for easier comparison between different companies. It covers various aspects of accounting, such as revenue recognition, expense matching, and asset valuation. By using GAAP, Cinch I.T. provides potential franchisees with financial statements that are prepared according to a recognized standard.
Furthermore, the FDD mentions that the preparation of financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. Additionally, the independent auditor's report states that their opinion is based on the financial statements presenting fairly the financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States of America.