7.2 Which assertions need to be tested on the statement given in the scenario?

(6 Marks)

Question 7 Study the scenario and complete the questions that follow: Laurel Limited was incorporated on 1 January 2020. You have been given the following statement and been asked by your team leader to assist the junior members of the audit team. Laurel Limited Statement of Profit or Loss for the Year Ended 31 December 2020 Notes 1 2 3 Revenue Less: Operating expenses Add: Other income Less: Finance costs Profit before tax Tax for the year Profit for the year R 303 750 137 500 25 000 5 000 196 250 49 875 146 375 R Notes to the Financial Statements 1 Revenue Revenue consists of rent revenue and commission revenue 2 Operating Expenses Operating expenses include: Directors' emoluments Leasing charges Audit fees 75 000 30 000 12 000 3 Other Income Profit on sale of land and buildings 30 000 4 Finance Costs Interest on overdraft 5 000