On what accounting basis are Ledgers' financial statements prepared?

According to Ledgers' 2025 Franchise Disclosure Document, the company's financial statements are prepared using the accrual basis of accounting. This method adheres to accounting principles generally accepted in the United States of America.

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 period of time compared to the cash basis, which only recognizes transactions when cash is received or paid out. For a Ledgers franchisee, this means that the financial data presented in the FDD reflects a comprehensive view of the franchisor's financial health, incorporating all earned revenues and incurred expenses.

Furthermore, the FDD emphasizes the importance of estimates and assumptions made by management in preparing these financial statements. These estimates can affect the reported amounts of assets and liabilities, and actual results could differ. Prospective franchisees should understand that while the accrual basis provides a standardized and reliable framework, the financial statements are still subject to management's judgment and potential variations.

Ledgers' financial statements also undergo an audit by an independent auditor, ensuring that they are presented fairly and in accordance with accounting principles generally accepted in the United States of America. This audit provides an additional level of assurance for potential franchisees, confirming the reliability and accuracy of the financial information presented.