Chapter 8 - REA modeling. When you've finished studying this chapter, and completing the activities at its conclusion, you should be able to: Compare and contrast view-driven and event-driven accounting information systems, use REA modeling to represent an event-driven AIS, use a REA model to design a relational database for an event-driven AIS. | Chapter 8 REA Modeling Outline Learning objectives Purpose and uses Terminology Cardinalities Database design Learning objectives Compare and contrast view-driven and event-driven accounting information systems. Use REA modeling to represent an event-driven AIS. Use a REA model to design a relational database for an event-driven AIS. Purpose and uses Purpose To describe an event-driven accounting information system Uses Identify the essential Resources, Events and Agents of the AIS Establish relationships between them Design relational databases to implement an event-driven AIS Terminology Events (center column) Three types Operating: sell inventory to customers Information: record inventory sales in the AIS Decision / management: decide whether to drop a specific product line Only strategically significant operating events appear in a REA model Determining strategically significant operating events is a matter of judgment and practice Terminology Resources (leftmost column) Items needed to carry out the events Examples Cash Inventory Equipment Employment application Terminology Agents (rightmost column) People needed to carry out the events Examples Employees Vendors Customers Stockholders Terminology Inventory Buy inventory Vendor Employee All entities in a REA model are illustrated with rectangles. Resources on the left, events in the middle, agents on the right. Cardinalities Show relationships between elements of the REA model Facilitate creation of database tables Three common symbols 0 1 * An employee might process no purchase orders. (“0”) Every order involves exactly one customer. (“1”) A single purchase requisition can include multiple inventory items. (“*”) Cardinalities To create cardinalities between two elements of a REA model, ask four questions. Set 1 For each “x,” what is the minimum number of “y?” For each “x,” what is the maximum number of “y?” Set 2 For each “y,” what is the minimum number of “x?” For each “y,” what is the maximum number of “x?” | Chapter 8 REA Modeling Outline Learning objectives Purpose and uses Terminology Cardinalities Database design Learning objectives Compare and contrast view-driven and event-driven accounting information systems. Use REA modeling to represent an event-driven AIS. Use a REA model to design a relational database for an event-driven AIS. Purpose and uses Purpose To describe an event-driven accounting information system Uses Identify the essential Resources, Events and Agents of the AIS Establish relationships between them Design relational databases to implement an event-driven AIS Terminology Events (center column) Three types Operating: sell inventory to customers Information: record inventory sales in the AIS Decision / management: decide whether to drop a specific product line Only strategically significant operating events appear in a REA model Determining strategically significant operating events is a matter of judgment and practice Terminology Resources (leftmost column) Items .
