The surprising nature of Benford's law makes it a useful tool to detect fraud. When people make up numbers, they tend to make the first digits approximately uniformly distributed; in other words, they have approximately equal numbers of Is, 2.s. and so on. Many tax agencies, including the Internal Revenue Service, use software to detect deviations from Benford's law in tax returns. Following are results from three hypothetical corporate tax returns. Each purports to be a list of expenditures, in dollars, that the corporation is claiming as deductions. Two of the three are genuine, and one is a fraud. Which one is the fraud?
Answer to relevant QuestionsFind the area: Find the area under the standard normal curve a. To the left of z .= 035 b. To the right of z = —1.56 c. Between z= 0.35 and z = 2.47 Is it normal? Is it reasonable to treat the following sample as though it comes from an approximately normal population? Explain. Pay your taxes: Among all the state income tax forms filed in a particular state, the mean income tax paid was p = $2000 and the standard deviation was a = $500. As part of a study of the impact of a new tax law, a sample of ...Estimate the population mean p with I and the population standard deviation a with s. In other words, assume that the data are a sample from a normal population with mean p = and standard deviation a = s. Under this ...Leaking tanks: Leakage from underground fuel tanks has been a source of water pollution. In a random sample of 107 gasoline stations, 18 were found to have at least one leaking underground tank. a. Find a point estimate for ...
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