What basis of accounting does Itan use for its financial statements?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Basis of accounting - The financial statements have been prepared using the accrual method in conformity with generally accepted accounting principles (GAAP) in the United States.
Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company prepares its financial statements using the accrual method of accounting. This method adheres to generally accepted accounting principles (GAAP) in the United States.
The accrual method 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 period of time compared to the cash method, which recognizes revenues and expenses only when cash is received or paid.
For a prospective Itan franchisee, this means that Itan's financial statements aim to present a true and fair view of its financial position and performance. Franchisees can rely on these statements to understand Itan's profitability, solvency, and overall financial health, which is crucial for making informed investment decisions. The FDD also mentions that management makes estimates and assumptions that affect the reported amounts of assets and liabilities, and actual results could differ from those estimates.