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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1
Objectives for Chapter 10
Recognize the economic foundations of the
resources, events, and agents (REA) model.
Understand the key differences between
traditional entity relationship modeling and REA
modeling.
Understand the structure of an REA diagram.
Be able to create an REA diagram by applying
the view modeling steps to a business case.
Be able to create an entity-wide REA diagram by
applying the view integration steps to a business
case.
Hall, Accounting Information Systems, 7e 2
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Traditional Approaches:
User-View Orientation
When data-modeling and IS design is
too oriented toward the user’s views,
problems arise:
multiple information systems
duplication of data
restricted user-view leads to poor
decision-making
inability to support change
Hall, Accounting Information Systems, 7e 3
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Resources, Events, and Agents Model
REA is an approach to database design
meant to overcome problems with traditional
approaches:
formalized data modeling and design of IS
use of centralized database
use of relational database structure
collects detailed financial and non-financial
data
supports accounting and non-accounting
analysis
supports multiple user views
supports enterprise-wide planning
Hall, Accounting Information Systems, 7e 4
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Resources, Events, and Agents Model
Participates
External Economic
Agent
Stock Flow
Economic Economic Event
Resource
Figure 10-1
Give Activity
Duality
Receive Activity
Internal Agent
Participates
Verify Availability
Take Order
Ship Product
Figure 10-5
Receive Cash
Figure 10-6
Figure 10-8
Hall, Accounting Information Systems, 7e 20
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Many-to-Many Associations
Many-to-many (M:M) associations
cannot be directly implemented into
relational databases.
They require the creation of a new
linking table.
This process splits the M:M association
into two 1:M associations.
The linking table requires a ‘composite
primary key’.
Hall, Accounting Information Systems, 7e 21
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Link Tables in an REA Diagram
Figure 10-9
Figure 10-12
User-View #1 User-View #2
Sales Report
Past Due Accounts
Name Amount
James $500.00 REA Database
Henry $100.00
… …