On what accounting basis are Crisp & Green's financial statements prepared?

According to Crisp & Green's 2024 Franchise Disclosure Document, the company prepares its financial statements using the accrual basis of accounting. This method adheres to accounting principles generally accepted in the United States of America (GAAP).

The accrual basis of accounting recognizes revenues when earned and expenses when incurred, regardless of when cash changes hands. This approach provides a more accurate picture of a company's financial performance over a specific period compared to the cash basis, which only recognizes transactions when cash is received or paid.

For a prospective Crisp & Green franchisee, understanding that the financial statements are prepared on an accrual basis is crucial for interpreting the financial data presented in the FDD. It ensures that the franchisee is reviewing financial information that reflects the true economic activity of the company, rather than just cash flow. This can impact how a franchisee assesses the financial health and stability of Crisp & Green.

Additionally, Crisp & Green's management uses estimates and assumptions in preparing the financial statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.