NaturalShrimp Inc (SHMP)

[eqinvestor]

You're wrong and since I worked for an accounting firm and worked on audits for pubco's, I can tell you you're wrong. I'm certain you will find I'm right if you confirm this with a CPA who has passed an exam.

There are 2 principles of revenue recognition under accrual accounting. First, an agreement which goods or services are to be delivered pursuant to typically a written agreement. Second, a reasonable certainty that payment will be made.

For example, if SHMP contracts with a distributor to purchase $250,000 in shrimp at x per pound for a 5 year period, SHMP would not recognize $5 million in revenues even if that agreement was with Whole Foods under the reasonable assurance principle of revenue recognition.

In the case of the company in Florida, no auditor would recognize the revenue immediately pursuant to a long term contract. In fact and if contract terms are 90 days after sale by distributor, no revenue recognition would take place based on the terms of the contract and the likelihood of getting paid.

That is why one goes to school for 4 years to become a CPA and it's a multi part test to be licensed as a CPA.

The principle of revenue recognition is not as easy as entering the monetary number on the contract. The payee, the terms and other things must be considered before recognizing the revenues.

Existing GAAP requires that, to be recognized, revenue should be earned and should be realized or
realizable. SEC guidance expands upon this concept by providing four criteria for revenue recognition as follows:

(a) Persuasive evidence of arrangement exists
(b) Delivery has occurred or services have been rendered
(c) The seller’s price to the buyer is fixed or determinable
(d) Collectibility is reasonably assured