What is the REA model?
Resources, events, agents (REA) is a model of how an accounting system can be re-engineered for the computer age. REA was originally proposed in 1982 by William E. McCarthy as a generalized accounting model, and contained the concepts of resources, events and agents (McCarthy 1982).
What are the key elements of REA model?
An REA model suggests that the basic data collected should be the resources, events, and agents in this exchange. Debits, credits, ledgers, and journals are not necessary in such a model. The data are collected and stored in a database that can then be used to provide reports and financial statements.
What are three basic types of entities in Rea?
– The REA data model prescribes a basic pattern for how the three types of entities (resources, events, and agents) should relate to one another.
What rea means?
Research, Evaluation & Assessment. REA.
What is the REA core pattern?
REA core pattern is a conceptual structure of relationships between the resources, events, and agents that constitute the transactional/transformational core of an economic exchange/conversion process.
What are the three steps of developing an REA diagram for a specific business cycle?
Developing an REA diagram for a specific transaction cycle consists of three steps: Identify the pair of events that reflect the basic economic exchange. Identify the resources affected by each event and the agents who participate in those events. Determine the cardinalities of each relationship.
Which of the following types of relationships in an REA diagram must be implemented as a separate table in a relational database?
Which type of relationship cardinality must be implemented in a relational database as a separate table? M:N relationship (Only M:N relationships must be implemented as separate tables in a relational database. Foreign keys can be used to implement 1:N and 1:1 relationships.)
What are the basic principles and design considerations for a rea model?
What are the basic principles and design considerations for a REA model? The basic principles for an REA model have the common purpose of organizing a database and providing instruction on how to properly read it. The REA is organized by Resources, Events, and Agents.
Which types of entities are included in REA diagrams?
But REA contains 3 classes of entities, Resource, Agents and Events are organized into group or constellations by class in the diagram.
What did the REA do?
The Rural Electrification Act of 1936, enacted on May 20, 1936, provided federal loans for the installation of electrical distribution systems to serve isolated rural areas of the United States. The funding was channeled through cooperative electric power companies, hundreds of which still exist today.
How is the REA model used in accounting?
B. The REA M odel The REA model is an alternative view of accounting. The model is built upon an organization’s resources , even ts , and age nts , and how these are related. Application of the REA model yiel ds a centralized (relational) database.
What are the steps in developing a REA model?
The process involves the following steps: 1. Identify the event entities. 2. Identify the resource entities. 3. Identify the agent entities. 4. Determine associations and cardinalities between entities. These procedures are performed for each organizational function being modeled. The result is several individual REA diagrams.
What are the benefits of the Rea approach?
Use of the REA approach can yield: more efficient operations by helping identifynon-value-added activities, by storingfinancial and nonfinancial data in the samecentral database, and greater support formanagement decisions; increased productivity through theelimination of non-value-added activities;
How are entity names represented in a REA model?
In ER diagrams, entity names are always represented in the singular noun form. REA modeling applies this rule when assigning names to resource and agent entities. Event entities, however, are given verb (action) names such as Sell Inventory, Take Order, or Receive Cash.