An investigator analyzed the leading digits of the amounts from 200 checks issued by three suspect companies.
law
Description
An investigator analyzed the leading digits of the amounts from 200 checks issued by three suspect companies. The frequencies were found to be 68, 40, 18, 19, 8, 20, 6, 9, 12 and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed frequencies are substantially different from the frequencies expected with Benford's law, the check amounts appear to be the result of fraud. Use a 0.05 significance level to test for goodness-of-fit with Benford's law.
