What accounting principles does Crave Cookies use for financial statement preparation?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2023 and 2022, there was no allowance for credit losses recorded.
Generally, the Company does not charge interest on past due accounts. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. During the years ended December 31, 2023 and 2022, credit loss expense related to doubtful accounts receivable, where collectability is not reasonably assured, was $5,000 and $0, respectively.
Inventories consist of cookie boxes. Inventories are stated at the lower of cost or net realizable value. Costs of cookie boxes are determined using the first-in, first-out (FIFO) method.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. This indicates that Crave Cookies adheres to a standardized set of guidelines and practices when reporting its financial performance and position. This is a common practice that ensures consistency and comparability across different companies' financial statements.
Specifically, the notes to the financial statements provide further detail on significant accounting policies. For example, inventories, which consist of cookie boxes, are stated at the lower of cost or net realizable value, with costs determined using the first-in, first-out (FIFO) method. Accounts receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive. The company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2023 and 2022, there was no allowance for credit losses recorded.
Additionally, the use of estimates is acknowledged, as the preparation of financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues, and expenses. This is a standard disclosure, recognizing that some financial statement elements rely on management's best judgment. Furthermore, independent auditors have audited Crave Cookies' financial statements and have issued opinions stating that the financial statements present fairly the company's financial position and results of operations in accordance with accounting principles generally accepted in the United States of America.