Choice "C" is correct. During an economic downturn, it is more likely that customers will default on payments owed. The auditor should therefore focus increased attention on the allowance for doubtful accounts, to ensure that it has been adjusted to appropriately reflect this increased risk.
Choice "b" is incorrect. A recession is not likely to affect purchase returns and allowances, though it might result in a decline in purchases.
Choice "d" is incorrect. A recession is not likely to directly affect the common stock account.
Choice "a" is incorrect. A recession is not likely to directly affect a pre-existing, noncontrolling interest in a subsidiary.