What does 'accounting principles generally accepted in the United States of America' (GAAP) refer to in the context of the Crave Franchising, LLC financial statements?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company prepares its financial statements on the accrual basis of accounting consistent with accounting principles generally accepted in the United States of America.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the company prepares its financial statements using the accrual basis of accounting, consistent with accounting principles generally accepted in the United States of America, or GAAP. This means that Crave's financial reporting adheres to a standardized framework of accounting rules, standards, and procedures recognized in the U.S. This framework ensures that financial statements are presented fairly and consistently, allowing for meaningful comparisons across different periods and companies.
GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. For example, management considers receivables to be fully collectible. If amounts become uncollectible, they are charged to operations in the period in which that determination is made. Accounting principles generally accepted in the United States of America require that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method. For the period ended December 31, 2024, there were no write-offs and no allowance deemed necessary.
Furthermore, the independent auditor's report included in the FDD states that their audit was conducted in accordance with auditing standards generally accepted in the United States of America (GAAS). Their opinion is that Crave's financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows in accordance with GAAP. This opinion provides an additional level of assurance to potential franchisees that the financial information presented by Crave is reliable and conforms to established accounting standards.