Does the Crave Cookies Statement of Cash Flows include a summary of significant accounting policies?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
See accompanying notes and independent accountants' audit report
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
Organization - Crave Cookies Franchising, LLC (the Company) formed on February 15, 2021 under the laws of the state of Utah as a Utah corporation.
The Company is a franchise company for Crave Cookies locations. The Company grants franchisees the right to operate a physical storefront location using the Crave Cookies name and marks.
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 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.
Concentrations of Credit Risk - Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations.
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash and cash equivalents. As of December 31, 2024 the Company did not have cash balances over the federally insured limit.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.
Contract receivables - 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, 2024, there was no allowance for credit losses recorded.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to the 2025 Crave Cookies FDD, the financial statements include notes that summarize significant accounting policies. These notes are integral to understanding how Crave Cookies prepares its financial statements.
The summary of significant accounting policies covers various aspects, including how Crave Cookies handles estimates, credit risk, cash and cash equivalents, and contract receivables. For instance, the use of estimates in preparing financial statements requires management to make assumptions that could affect reported amounts. The company also performs ongoing credit evaluations of its customers and maintains allowances for possible losses.
For a prospective Crave Cookies franchisee, understanding these accounting policies is crucial. It provides insight into how the franchisor manages its finances and assesses risks. This knowledge can help franchisees better interpret the financial statements provided in the FDD and make informed decisions about the financial health and stability of the franchise system.