1. The goal of the external auditor is to avoid giving a(n). materially misstated. when the financial statements are a. statement of cash flows b. form 10-K c. PCAOB exemption d. unqualified audit opinion 2. The first digit test has a bluntness issue. An amount such as $200,000 can be increased by percent and it will still have the same first digit. a. 49.999 percent b. 99.999 percent c. 100 percent d. 200 percent 3. The Z-statistic is used to test whether the actual proportion for a specific first-two digits differs from the Benford expectation. a. materially b. significantly c. null hypothesis d. functionally 4. We conclude that we have a statistically significant difference at a significance level of 5 percent between the actual and the Benford proportions when the test statistic exceeds the critical value of a. 0 b. 1.96 c. 2.57 d. π 5. If a first-two digit test is run, and if the calculated chi-square statistic exceeds 112.02, then we would conclude that the data a. contains material errors b. needs to continuity correction term c. does conform to Benford d. does not conform to Benford 6. With respect to the critical values for the MAD in Table 4.2, the smallest MADs in each case (first digits, second digits, and so on) give us a(n). conclusion. a. close conformity b. nonconformity c. equal to that of the chi-square test d. materiality-based 7. Figure 4.6 shows 13 large spikes depending on your definition of large. Choose the best definition of a spike. a. The actual proportion exceeds the expected Benford proportion by a large margin. b. The expected Benford proportion exceeds the actual proportion by a large margin. c. The actual proportions for the 10, 20, 30, ..., 90 first-two digits. d. A calculated chi-square above 112.02. 8. With Benford-based sampling the positive and the negative amounts are tested separately because a. Excel is limited in the number of rows that it can process. b. Excel's COUNTIF function can only work on positive numbers. c. Benford's Law does not apply to negative numbers. d. the