Question $10$

Kevin and Sunny were studying for their mid$-$term exam on Financial

Administration in Sport and discussing financial statements. Kevin

stated, "The terminologies used in a balance sheet must be the same

for all corporations so that everyone can easily know what they are."

Upon hearing this, Sunny disagreed, stating, $"$No$,$ I don't think so$.$ As

far as I know, it's the opposite. The terminology used may differ from

one company to another." Sunny then added, $"$By the way, did you

know that accrual basis has to be used when preparing an income

statement, which is required by Generally Accepted Accounting

Principles $($GAAP$)?"$ Based on the dialogue above, whose

statement$($s$)$ are correct?

Kevin

Sunny

Sunny's first statement on balance sheet is correct, but his second

statement regarding income statement is not correct.

Both of their statements are incorrect.