ACCOUNTING INFORMATION SYSTEMS RESOURCES, EVENTS AND AGENTS (REA) DATA BASE MODEL

ACCOUNTING INFORMATION SYSTEMS RESOURCES, EVENTS AND AGENTS (REA) DATA BASE MODEL

Table of Contents

Introduction. 3

Question 1: REA diagram adhering by basic cardinalities for Joe’s Revenue cycle. 3

Question 2: REA diagram adhered by cardinalities for Expenditure cycle. 4

Question 3: Combined REA model 7

Question 4: key attributes. 9

Question 5: Query about account receivable from integrated REA model (DBMS) 12

Question 6: Query about account receivable from specific customers as stated REA model (DBMS) 13

Conclusion. 13

Reference list 14

Introduction

REA (Resources, Events and Agents) is an exchange procedure showing speculation, closer to the exchange reality than some unique well-known choice. Not under any condition like every unique framework, has REA demonstrated reveals why business shapes happen and suits full traceability of all business trades. In light of its exchange level covering business space, REA theory is to an exceptional degree satisfying in show driven approach of programming. Joe’s is a little dessert shop composed close to the zone school’s baseball field. Joe’s serves stroll around clients as it’s been said

Question 1: REA diagram adhering by basic cardinalities for Joe’s Revenue cycle

The shop passes on 26 kinds of frozen yogurt. Clients can purchase shakes, cones and sundaes. Right when a client pays for an individual buy, business exchanges more a huge piece of the time than denies only a solitary thing. Right when a client pays for a family or get-together buy, notwithstanding, a solitary techniques exchange joins a far reaching course of action of things. All outlines must be paid for at the time the set up frozen yogurt is served. Joe’s keeps up a couple of managing a record accounts yet stores all business receipts into its central cash related records.

1:N relationship between the occasions and clients delineated in below image would apply to each relationship, since it is consistently indispensable to relate a request, plan and receipt of money with a particular client (Haislip et al. 2016). The 1:N relationship among those occasions and operators would likely apply to most affiliations, yet there could be conditions in which relationship would be M:N. For instance, a land firm may need to part commission for a course of action between posting overseer and the purchaser’s power.

M:N relationship among stock and take client request and plan occasions are conventional for retail affiliations that strategy in mass-made stock. Those affiliations would bend up recognizably 1:N, regardless, for relationship, for example, workmanship appears, that offer extraordinary things.

1:N relationship among money and the get money occasion would apply all around, reflecting sound inside control over money. The cardinalities of relationship between the occasions, regardless, would vary transversely completed affiliations relying upon their business approaches. For instance, if a connection did not allow allocate, by then the most exceptional cardinality from course of action occasion to the get money occasion would be one, not a lot of.

Figure 1: Revenue Cycle for Joe’s cardinalities

(Source: self developed)

Question 2: REA diagram adhered by cardinalities for Expenditure cycle

A REA diagram exhibits a model of affiliation’s database. Intertwined into model is a delineation of broad number of tables contained in database and furthermore a large portion of the affiliations that exist between tables inside the database (Uyar et al. 2017). These tables and affiliations mirror business system and business occasions of affiliation. Thusly, an evaluator can utilize a REA outline to get a handle on which occasions affect the alliance’s points of interest and which stars share in them. The data about cardinalities in a REA chart gives pleasing data around a connection’s business rehearses, for example, paying little regard to whether it blessings clients to make segment divides (Marshall and Steinbart, 2003). Hence, screens can utilize REA layouts to design the review.

Figure 2: Expenditure Cycle for Joe’s cardinalities

(Source: self developed)

There are resource orders recorded on an affiliation accounting report that would not be appeared as favourable position on a REA plot. The most noticeable is Accounts Receivable. Records Receivable is basically separation between add up to that an affiliation has sold to a client and the aggregate client has paid for those plans, and, in this manner, require not be unequivocally appeared as an advantage.

There are in like way two or three advantages in a REA exhibit that don’t show up on an alliance’s cash related record as breathing space (Tarigan and Kraus, 2017). A basic blueprint is worker aptitudes. The aptitudes controlled by pros are in all probability a cash related asset for an association. As we will find in portion 19, these aptitudes would be recorded in a database to help productive association, expect future getting and arranging needs, and so forth. As appeared by sound accounting rules, notwithstanding, worker limits are not recorded as inclination in monetary elucidations. This does not deduce that they require cash related respect; when in doubt, offer trading structure seems to put immense weight on intangibles like worker information while picking the market estimation of an affiliation. Records payable is not tended to on a REA graph. Records payable has a tendency to purchases for which affiliation has not yet paid supplier. In this way, at whatever point, propel chief liabilities can be learned by isolating two events: purchases and cash partition for those purchases. Regardless, this ability must be recorded in real money related enlightenments as a commitment at a particular point in time. Since the payable recorded in money related proclamations is a remainder of sorting out circumstances, it is not leverage, event, nor a head. Subsequently, it won’t appear on a REA diagram. There are asset orders recorded on an alliance bookkeeping report that would not be showed up as ideal position on a REA plot (Sun, 2017). The most recognizable is Accounts Receivable. Records Receivable is fundamentally the division between signify that an association has sold to a customer and total customer has paid for those plans, and, in this way, require not be unequivocally showed up as preference.  This does not deduce that they require cash related respect; when in doubt, the offer trading structure seems to put immense weight on intangibles like worker information while picking market estimation of an affiliation. Records payable is not tended to on a REA graph.

Question 3: Combined REA model  

In order to formulate a combined integrated REA model, one has to comprehend about the norms about dual REA formulation.

First and foremost, redundant resource embodiments are efficiently merged for essential formulation of dual (both expenditure and revenue cycle) cycle. The commonly witnessed resources are placed in between the accurate events which impart substantial impact on these determined resources. Furthermore, this particular aspect augments the concept of “economic duality” which explains cash resources’ connection to at least one event that elevates the resource and another event that may decrease its potential. Moreover, inventory resources provide essential linkage between revenue and expenditure cycle as it increases expenditure cycle and decreases revenue cycle. However, cash resources are enhanced with definite enhancement of revenue cycle and with simultaneous decrease in expenditure cycle (Ab Rahman et al. 2016).

Redundant event embodiments are merged as some events may occur (disturb cash) for multiple times in a cycle. This particular aspect increases major legibility of dual REA formulation.  Further, difference in merging of events and merging of resources is identified which efficiently do not impart and stringent affect on major cardinalities.

Wang and Yao (2017) opine that merging unwanted events modified minimum degree of cardinalities which are associated with major events. These major events are further related to merge events. Hence, cardinalities witnessed in between inventories and each of the 4 events (to which they are essentially related) is similar to its existing pattern. Fallon and Polovina (2013) counter argued and stated that cardinalities existing between disbursement cash events and other major related events (which are linked) exhibit significant variance.

Figure 3: Combined REA model

(Source: self developed)

From the above exhibited diagram. It is clear that the co-ordinates of basic cardinalities between cash (disbursed) and inventory received is (o, n) instead of (1, n) in the above exhibited expenditure cycle (Perez‐Polo et al. 2016).  Furthermore, cardinality coordinates of disbursed cash and worked record hours is (o, n) instead of (1, n) in the above exhibited pay roll cycle. Many experts opine that the reason for such may lie in its basic semantics which exhibit multiple resource relationships with respective and linked events. For an instance, in the above given diagram, Joe’s inventory is linked with inventory received event and within the diagram’s determined expenditure cycle. Furthermore, major sale events are connected to sale procedures in revenue cycle as exhibited in above formulated dual REA model.  Another instance that is model exhibits is events of cash disbursement which may occur as a result for payroll obligation of acquiring inventories. However, this model definitely differentiates such cash outflow through its basic semantics consideration (Trkov et al. 2015).

Question 4: key attributes

Table Primary key Other attribute(as recognized from the given set of REA model)
 Overall Employee domain that essentially includes major vendors, inventory that is ordered and inventory received Employee (#) Secondary key Nationality Employee’s insurance Foreign key Name of the employee date during which the employee was hired, salary of the employee  position of employment of the respective employee
Vendors Vendor# Secondary key Customer identification number as discussed during vendor selection Number that determined term identification Secondary key Determining only the latest domain of each product’s stock number   Name of the determined vendors as described in Joe’s case Address of the vendors during cases of extreme emergencies or for any shortfalls Vendors’ initial account balance
Order Inventory as exhibited in REA model Purchase Order# (which Joe should determine) Date Vendor# Employee#
Receive Inventory as exhibited in the REA model Acquired Receiving Report# Date Vendor (major information)# Employee (major and address and other personal details)# Purchase # Order # Check #
Disburse Cash as exhibited in the model during major instances Check# Secondary keys Vendor# Employee# GLA account# Vendor (major information)# Employee (major and address and other personal details)# GLA account # Amount as determined
Inventory  which will be determined adhering by ordered amount Item# Secondary keys Employee#, Vendor# Receiving Report# Description of the inventory Initial quantity that this entity may acquire in hand Major list price and other constructive pricing details
Cash both in hand and acquired during selling procedures GLA account# Account Name which should be initially identified beginning balance of the account  
Sales or overall turnover as determined Invoice as determined# Date on which selling process occurs Customers or consumers # Amount Determined employees #  
Receive Cash in the given REA model Remittance as witnessed# Date on which selling procedures occur Customers or consumers # Amount Determined employees GLAaccount # (both determined)    
Inventory as observed Item# Description of the inventory Inventory  quantity acquired in hand Quantity of reorder Point of reorder
Inventory (Order Inventory as determined from REA model) Purchase Order witnessed # Item# Quantity of the reorder inventory Unit Cost of one inventory
Inventory (Received Inventory as determined from REA model) Receiving Report#, Item# Quantity of the inventory which is to be received Condition of the inventory received
Sales-Inventory (selling procedures of major inventory) Invoice# Item# Quantity of the inventory Unit Price of each inventory

Table 1: primary keys and other attributes

(Source: self developed)

Question 5: Query about account receivable from integrated REA model (DBMS)

The query for determining overall account receivable from Joe’s integrated data base model is exhibited in the following form

  • Calculation of initial accounts which is payable by adding the initial balance attribute mentioned in customer table from integrated model(1)
  • Calculation of overall new sales revenue during recent fiscal year by adding the quantity of product which is sold X times of sales unit price. It is particularly demonstrated in sales: inventory linking table (2)
  • Computation of overall cash acquired from integrated model by adding the amount acquired column in received cash table (3)
  • Overall account receivable = Query 1 + Query 2 – Query C

Question 6: Query about account receivable from specific customers as stated REA model (DBMS)

The query for determining overall account receivable from Joe’s integrated data base model is exhibited in the following form

  • Essential calculation of initial or beginning accounts  which is receivable by summation of initial balance attributes existing on customer table for basic interested customers (1)
  • Vital selection of only particular rows in sales table which represents selling procedures to major interested customers. Further, rows in the customer table that holds the value in determined Customer # in secondary key column is similar to customers # exhibited in customer of interest column (2)
  • Fiscal period’s overall sale is computed by essential summation of quantity of products which is sold x times of sale’s unit price. This is obtained from Sales: inventory linkage table for only rows exhibiting invoice number
    (from query b) (3)
  • Calculation of overall cash received from customers is ascertained by adding the overall amount acquired column in received cash table. However, rows which exhibit values in Customer secondary key column are similar to Customer # exhibited in interested customer table (4)
  • Hence, overall account receivable = Query1 + Query 3 – Query 4

Conclusion

Examination of a REA outline would uncover whether the connection stretches out credit to its clients, which would then require studies of records receivable, or just benefits deals. An investigator can utilize a REA outline to test a customer’s business outlines for consistence with different controls that the customer has made. For instance, the assessor would setup have the capacity to questions partner various workers to various occasions recalling a definitive goal to overview whether there is satisfactory separation of duties.

Reference list

Ab Rahman, A., Fauzi, A.A.M. and Thoarlim, A., 2016. The Development Of An Intergrated Model For Amil Zakat In Malaysia. International Journal of Islamic Business Ethics1(2), pp.131-142.

Fallon, R. and Polovina, S., 2013. REA analysis of SAP HCM; some initial findings.

Haislip, J.Z., Peters, G.F. and Richardson, V.J., 2016. International Journal of Accounting Information Systems. International Journal of Accounting Information Systems20, pp.1-15.

Marshall, R.B. and Steinbart, P.J., 2003. Accounting Information System.

Perez‐Polo, J.R., Rea, H.C., Johnson, K.M., Parsley, M.A., Unabia, G.C., Xu, G.Y., Prough, D., DeWitt, D.S., Paulucci‐Holthauzen, A.A., Werrbach‐Perez, K. and Hulsebosch, C.E., 2016. Inflammatory cytokine receptor blockade in a rodent model of mild traumatic brain injury. Journal of neuroscience research94(1), pp.27-38.

Sun, W., 2017, March. A study on XBRL based value chain accounting information processing. In Industrial Technology and Management (ICITM), International Conference on (pp. 171-175). IEEE.

Tarigan, J. and Kraus, W.A., 2017. The Impact of Strategic Leadership Program as ODI on the Usage Accounting Information System and Financial Performance. Journal of Progressive Research in Social Sciences6(1), pp.410-421.

Trkov, M., Han, H., Yi, J. and Liu, Y., 2015, October. Stick-slip interactions of the soft-solid contact: An intergrated LuGre/beam network model approach. In Proceedings of the ASME 2015 Dynamic Systems and Control Conference, Columbus, OH, USA(pp. 28-30).

Uyar, A., Gungormus, A.H. and Kuzey, C., 2017. Impact of the Accounting Information System on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian Accounting Business & Finance Journal11(1), p.9.

Wang, B. and Yao, M., 2017. Examination of Drying Behavior of Mung Bean in Laboratory and the Establishment of the Corresponding Rea Model. Journal of Food Processing and Preservation41(3).