In franchise accounting, the focus is best described as which combination?

• A. Balance sheets and income statements
• B. Expenses and income
• C. Revenue and profit
• D. Financial statements and forecasts

Answer: (D)

Franchise accounting hinges on both reporting what has happened and predicting what will happen. Financial statements document actual results—showing the franchise’s financial position on the balance sheet, profitability on the income statement, and liquidity through cash flow. At the same time, forecasts or budgets project future performance, guiding decisions about royalties, brand contributions, marketing funds, and expansion plans. This combination provides a complete view needed to assess viability, plan resources, and set targets across the franchise network. Purely historical data or purely forward-looking projections miss the essential link between past performance and future expectations, which is why the focus is best described as financial statements and forecasts.