In a period of recession in a particular industry, the auditor would typically spend more time on which of the following accounts?
A)Purchase discounts
B)Allowance for doubtful accounts
C)Preferred stock
D)Equity method investment account with a noncontrolling interest in a subsidiary

Question

Quizplus · Accepted Answer

In a period of recession, companies may have difficulty collecting on their accounts receivable, leading to an increase in the allowance for doubtful accounts. The auditor may spend more time assessing the adequacy of this allowance to ensure that the financial statements reflect the true collectability of the company's receivables.

In a Period of Recession in a Particular Industry, the Auditor