Benford's law states that the probability distribution of the first digits of many items (e.g. populations and expenses) is not uniform, but has the probabilities shown in this table.
Business expenses tend to follow Benford's Law, because there are generally more small expenses than large expenses.
Perform a "Goodness of Fit" Chi-Squared hypothesis test ( = 0.05) to see if these values are consistent with Benford's Law.
If they are not consistent, it there might be embezzelment.
Complete this table. The sum of the observed frequencies is 111
Report all answers accurate to three decimal places.
What is the chi-square test-statistic for this data? (Report answer accurate to three decimal places.)
What is the P-value for this sample? (Report answer accurate to 3 decimal places.)
P-value =
The P-value is...
This P-Value leads to a decision to...
As such, the final conclusion is that...
Business expenses tend to follow Benford's Law, because there are generally more small expenses than large expenses.
Perform a "Goodness of Fit" Chi-Squared hypothesis test ( = 0.05) to see if these values are consistent with Benford's Law.
If they are not consistent, it there might be embezzelment.
Complete this table. The sum of the observed frequencies is 111
| X | Observed Frequency (Counts) | Benford's Law P(X) | Expected Frequency (Counts) |
|---|---|---|---|
| 1 | 19 | .301 | |
| 2 | 28 | .176 | |
| 3 | 16 | .125 | |
| 4 | 16 | .097 | |
| 5 | 11 | .079 | |
| 6 | 3 | .067 | |
| 7 | 8 | .058 | |
| 8 | 5 | .051 | |
| 9 | 5 | .046 |
What is the chi-square test-statistic for this data? (Report answer accurate to three decimal places.)
What is the P-value for this sample? (Report answer accurate to 3 decimal places.)
P-value =
The P-value is...