What accounting standards are used in the Spray Net financial statements?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
Basis of Accounting-The accompanying financial statements have been prepared on an accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability is incurred, without regard to disbursement of cash.
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 vary from those estimates.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. This is commonly referred to as GAAP.
The FDD specifies that Spray Net uses the accrual basis of accounting. This means that revenues are recognized when earned and expenses are recognized when a liability is incurred, regardless of when cash changes hands. This is a standard accounting practice that provides a more accurate picture of a company's financial performance over time compared to cash-based accounting.
Furthermore, the document states that 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, as all financial statements prepared under GAAP require the use of estimates to some degree. Actual results could differ from those estimates, which is a risk factor to consider when reviewing the financial statements.