Implementing an REA Model in a Relational Database

Learning Objectives • Integrate separate REA diagrams for individual business cycles into a single, comprehensive organization-wide REA diagram. • Build a set of tables to implement an REA model of an AIS in a relational database. • Explain how to write queries to retrieve information from an AIS relational database built according to the REA data model. Copyright © 2015 Pearson Education, Inc. 18 -2

Combining REA Diagrams • Individual REA diagrams can be combined to form an integrated REA diagram by: ▫ Merging redundant resource entities (e. g. , inventory is acquired in expenditure cycle and reduced in the sales cycle) ▫ Merging redundant event entities (e. g. , disburse cash event appears in the expenditure cycle and the payroll cycle) Copyright © 2015 Pearson Education, Inc. 18 -3

Integrated REA Diagram Rules • Every event must be linked to at least one resource. • Every event must be linked to two agents who participate in that event. • Every event that involves the disposition of a resource must be linked to an event that involves the acquisition of a resource (give -get exchange). • Every resource must be linked to at least one event that increments that resource and to at least one event that decrements that resource. • If event A can be linked to more than one other event, but cannot be linked simultaneously to all of those other events, then the REA diagram should show that event A is linked to a minimum of 0 of each of the other events. • If an event can be linked to any one of a set of agents, then the ERA diagram should show that event is linked to a minimum of 0 of each of those agents. Copyright © 2015 Pearson Education, Inc. 18 -4

Using an REA Diagram to Build a Relational Database • Create tables for each distinct entity and M: N relationship • Assign attributes to each table ▫ Identify primary keys ▫ Concatenated keys for M: N relationship table • Use foreign keys to implement 1: 1 and 1: N relationships Copyright © 2015 Pearson Education, Inc. 18 -5

Deriving Accounting Information from REA Diagram • Journals ▫ Information contained in event tables • Ledgers ▫ Information contained in resource tables (increment and decrements of events) • Financial statements ▫ Information contained in resources and events using a set of queries • Management reports ▫ Financial and nonfinancial information Copyright © 2015 Pearson Education, Inc. 18 -6