Answer the following questions based on the information for Cloud 9 presented in Appendix B of this book and in the current and earlier chapters. You should also consider your answers to the case study questions in earlier chapters.
Required
(a) Consider and explain the effects that the opening of Cloud 9's first retail store would have on its accounting.
(b) Describe how this business change would affect the components of audit risk.
(c) What changes would you expect to see in inventory transactions and balances as Cloud 9 changes from a wholesale-only business to a retail and wholesale business? Be specific in your answer.
(d) Which inventory balance and transaction assertions would be most affected? Explain.
(e) Describe the population(s) and suggest a sampling approach for controls and substantive testing for inventory.