The Hair Emporium

Abstract

1. Identify what type of accounting records and financial statements should be offered to the Franchisees?

Every franchisor or franchisee must keep a set of financial records. Too often the franchisee or a franchisor is a beginner, opening a business for the first time, and is not fully aware of what it takes to run a business, particular from the point of view of managing the finance.

Accounting is a process of measuring and reporting financial information of the franchise. Accounting information is economic information's. It relates to the financial or economic activities of the business or organization. Financial statements are informational pictures of the financial statues of a particular business firm for a certain period of times. Today record keeping referred to as accounting system. It is essential to the proper start up of the franchise to determine the financial required for the franchisor to begin operation.

The Income statement it show the profit and loss and its usually prepared on a monthly , quarterly or yearly and indicate the profit and loss resulting from sales and expanses.

Balance Sheet, it is an accounting statement at specific period of time. It differentiates between loans and the fund put in business. Cash Flow is the flow of money through the business and it show all cash received as revenue and cash expended.

2. Should balance sheets and operating statements be offered monthly or yearly? Give the pros and cons of doing each.

The balance sheet is an accounting statement which is a snapshot of the financial condition of the franchise business at a specific period of time. This financial statement relies on the basic accounting equation and is often called a "statement of financial position of the business. The accounting equation is:

Assets = Liabilities + Owners Equity

The balance sheet differentiates between money used by the franchisor for a short period of time -- less than one year (current assets), and money used for longer periods of time -- more than one year. The balance sheet will also indicate the different between the monies received from creditors or loans (liabilities or debts) and funds put into the business by the owners. (. The credit worthiness of the business is determined by the information that these reports provide. Detail from a Balance Sheet report can be used to determine the cash flow that is available to finance growth or repay debt.

3Explain why or why not there should be a recommendation on common accounting procedures for all franchisees.

The best way to determine if projected resources will cover the franchise year expenses is to prepare a cash flow balance sheet containing monthly expenses and resources. You can then compare expenses with