Advanced data modelling

Question 1

Benford’s Law

Answer 1

In a large number of transactions, the most frequent first digit is 1, followed by 2, and then 3, and so on.

Question 2

How does Benford’s law help accountants

Answer 2

It helps test for abnormal duplication, gives expected or normal duplications. Any deviation is considered a red flag

Question 3

What are some primary tests to carry out with Benford’s law

Answer 3

first digit test, second digit test, first 2 digit test

Question 4

Uses of the first digit test and second digit test

Answer 4

tests to help detect biases in data, more useful in smaller datasets

Question 5

uses of the first 2 digits test

Answer 5

more focused compared to other 2 tests because those are highly aggregated
provides more information
useful in detecting abnormal duplication and possible biases in data

Question 6

uses of the first 2 digits test

Answer 6

more focused compared to other 2 tests because those are highly aggregated
provides more information
useful in detecting abnormal duplication and possible biases in data