An investigator analyzed the leading digits from 781 checks issued by seven suspect companies. The frequencies were found to be 0, 12, 1, 64, 489, 141, 9, 16, and 49, 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 shown below, the check amounts appear to result from fraud Use a 0.025 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud? Leading Digit Actual Frequency Benford's Law: Distribution of Leading Digits 2 3 4 6 7 9 12 64 489 141 16 49 30.1% 17.6% 12.5% 9.7% 7.9% 6.7% 5.8% 5.1% 4.6% Determine the null and alternative hypotheses. Họ: H,: Calculate the test statistic, . 2 = (Round to three decimal places as needed.) Calculate the P-value. P-value = (Round to four decimal places as needed.) State the conclusion. V Ho. There V sufficient evidence to warrant rejection of the claim that the leading digits are from population with a distribution that conforms to Benford's law, It V that the checks are the reseult of fraud

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11.

An investigator analyzed the leading digits from 781 checks issued by seven suspect companies. The frequencies were found to be 0, 12, 1, 64, 489, 141, 9, 16, and 49, 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 shown below, the check amounts appear to result from fraud.
Use a 0.025 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud?
Leading Digit
Actual Frequency
Benford's Law: Distribution of Leading Digits
1
2
3
4
7
8
9.
12
1
64
489
141
9.
16
49
30.1%
17.6%
12.5%
9.7%
7.9%
6.7%
5.8%
5.1%
4.6%
Determine the null and alternative hypotheses.
Ho:
H1:
Calculate the test statistic, x.
x = (Round to three decimal places as needed.)
%D
Calculate the P-value.
P-value = (Round to four decimal places as needed.)
State the conclusion.
V Ho. There
sufficient evidence to warrant rejection of the claim that the leading digits are from a population with a distribution that conforms to Benford's law. It
that the
checks are the result of fraud.
Transcribed Image Text:An investigator analyzed the leading digits from 781 checks issued by seven suspect companies. The frequencies were found to be 0, 12, 1, 64, 489, 141, 9, 16, and 49, 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 shown below, the check amounts appear to result from fraud. Use a 0.025 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud? Leading Digit Actual Frequency Benford's Law: Distribution of Leading Digits 1 2 3 4 7 8 9. 12 1 64 489 141 9. 16 49 30.1% 17.6% 12.5% 9.7% 7.9% 6.7% 5.8% 5.1% 4.6% Determine the null and alternative hypotheses. Ho: H1: Calculate the test statistic, x. x = (Round to three decimal places as needed.) %D Calculate the P-value. P-value = (Round to four decimal places as needed.) State the conclusion. V Ho. There sufficient evidence to warrant rejection of the claim that the leading digits are from a population with a distribution that conforms to Benford's law. It that the checks are the result of fraud.
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