Question 7 Study the scenario and complete the questions that follow. Notes 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 R Revenue 1 303 750 Less: Operating expenses 2 137 500 Add: Other income 3 25 000 Less: Finance costs 4 5 000 Profit before tax 196 250 Tax for the year 49 875 Profit for the year 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 foes 3 Other Income Profit on sale of land and buildings 4 Finance Costs Interest on overdraft 75 000 30 000 12 000 30 000 5 000 COAGB2-B44 - Tako-Home Assessment Block 4 2021|V1.0 Page 10 of 15 7.1 The auditor has a duty to gather evidence to support the audit opinion. Audit evidence needs to meet certain criteria. Explain what the criteria are. (2 Marks) 7.2 Which assertions need to be tested on the statement given in the scenario? (6 Marks)