Download - Ppt_16_REA in RB x Xx
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Chapter 18
Implementing an REA Model in aRelational Database
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Learning Objectives
Integrate separate REA diagrams for individual businesscycles into a single, comprehensive organization-wideREA 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 froman AIS relational database built according to the REAdata model.
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Introduction
In the previous chapter, you learned how todevelop an REA diagram for an individualtransaction cycle.
This chapter demonstrates how to implement anREA diagram in a database.
We focus on relational databases because: They are commonly used to support transaction processing
systems.
They are familiar to most business students.
But REA modeling can also be used to designobject-oriented databases.
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Learning Objective 1
Integrate separate REA diagrams forindividual business cycles into a single,comprehensive organization-wide REA
diagram.
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IntegratingREA Diagrams Across Cycles
In Chapter 17, we looked at REA diagrams for therevenue and expenditure cycles (homework).
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REA DiagramRevenue Cycle
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REA DiagramExpenditure Cycle
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IntegratingREA Diagrams Across Cycles
In Chapter 17, we looked at REA diagrams for therevenue and expenditure cycles (homework).
Before we integrate these diagrams with the payroll
cycle, lets take a look at the HR/payroll cycleactivities.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
The basic economic exchange:
Get employee time and skills
Give a paycheck
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
The time workedevent must be
linked to a particular employee andsupervisor for a (1,1) cardinality.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
However, each agent can be linked to zero
or many time workedevents. The zero
minimum allows for inclusion of a new
employee or supervisor who has not yetbeen involved in a time recording.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
A similar situation exists with the disburse
cashevent. (We regard each individual
paycheck as a separate cash
disbursement.)
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
The assumption is made that employees record time worked on a
daily basis.
Time workedis therefore linked to a maximum of one cash
disbursement, since employees arent paid for half a day on one
paycheck and the other half of the day on another check.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
For each cash disbursement,
however, there are one-to-many
time workedevents.
In other words, a paycheck couldpay an employee for anywhere from
one days work to many.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
The employee timeentity requires some explanation.
The resource being acquired by the time workedevent is the
use of an employees skills and knowledge for a particular period
of time.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
Time is different from
inventory and other
assets in that it cannot
be stored.
There are only a few
relevant attributes about
employee time:
Hours worked
How the time was
used
Th ti k d d
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
The time workedand
disburse cashevents
capture all the
information about
employee time that it ispractical to collect and
monitor.
Consequently, the
employee timeresource
entity is almost neverimplemented in an
actual database, which
is why it is depicted with
dotted lines.
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REA DiagramPayroll Cycle
Employees
Employee
(Payroll Clerk)
Employee
(Supervisor)
Time Worked
Disburse Cash
Employee
Time
Cash
In the relationship between cash disbursementand the cash
resource:
This relationship is identical to the expenditure cycle.
Each check or EFT must be linked to at least one cash account
(and usually only one), leading to a (1:1) cardinality.
Each cash account can be linked to:
As few as zero cash disbursements (e.g., a new account).
And up to many.
Means a (0,N) cardinality.
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Learning Objective 2
Rules for Combining REA Diagrams
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Rules For Combining REA Diagrams
Some entities appear in more than one transactioncycle diagram. Inventoryappears in the revenue and expenditure cycles.
Cash disbursementsappear in the expenditure and payroll
cycles. Employees(agent) and cash(resource) appear in all three
cycles.
These redundancies provide the basis for combiningthediagrams.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
In this integrated diagram, we see three
separate cycles.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The revenue cycle appears in yellow.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The expenditure cycle appears in blue.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The payroll cycle appears in pink.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The integrated diagram merges multiple
copies of resourceand evententities but
retains multiple copies of agent entities.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Lets look at how to combine redundant
resourceand evententities.
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Rules For Combining REA Diagrams
Merging Redundant Resource Entities
The REA diagrams for individual transaction cycles arebuilt around basic give-geteconomic exchanges.
Diagrams for individual cycles provide only partial
information. Example: The expenditure cycle tells you how the
company gets inventory, but doesnt tell you whatbecomes of the inventory.
To integrate the cycles, we redraw the REA diagram to
place common resources between the events thataffect them.
Reflects the economic duality that every resourcemust be connected to at least one event thatincreases the resource and at least one event that
decreases it.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Inventory has been shown in greenhere,
because it is increased by the expenditure
cycle and decreased by the revenue cycle.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Cashis increased by the revenue cycle and
decreased by both the expenditure and payroll
cycles.
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Rules For Combining REA Diagrams
Merging Redundant Event Entities
Some events (e.g., disburse cash)may appear in multiple transactioncycles.
Merging these multiple occurrencesimproves the legibility of the resultingdiagram.
Our integrated diagram shows the disbu rse cash
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Our integrated diagram shows the disbu rse cash
event (shown in purple) is linked to both receive
inventory(in the expenditure cycle) and time worked
(from payroll cycle).
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Rules For Combining REA Diagrams
Difference between merging redundant events andmerging redundant resources:
Merging redundant resources does not affect anycardinalities.
Merging redundant events alters minimum cardinalitiesassociated with the other events that are related to themerged event.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Cardinalities between inventoryand each of the four
events to which it is related are the same as before.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Cardinality between the cash disbursementevent
and other events with which it is linked are different.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The cardinality between disburse cashand
receive inventoryis now (0,N) instead of (1,N)
as it was in the expenditure cycle.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The cardinality between disburse cashand
record hours workedis now (0,N) instead of
(1,N) as it was in the payroll cycle.
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Rules For Combining REA Diagrams
Reason lies in the semantics
A resource entity can and usually is linked to multipleevents.
Example: Inventoryis linked to areceive inventoryevent
in the expenditure cycle and asales(or deliverinventory) event in the sales cycle.
Because both links are possible, none of the cardinalitiesin the individual diagrams need to change when thediagrams are merged.
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Rules For Combining REA Diagrams
Reason lies in the semantics
An event that occurs in one cycle can be linkedto:
An event that is part of one transaction cycle; or
An event that is part of another transaction cycle;
But not both!
Example: A cash disbursementis to pay an employee(payroll) or buy inventory (expenditure), but not both.
The minimum cardinality associated with the other eventmustbe zero in the integrated diagram.
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Rules For Combining REA Diagrams
Remember:
A minimum of one means that each instance of that
entity has to be associated with at least one instance
of the other entity.
Each cash disbursement is linked to either a recordingof hours or a receipt of inventory, but not both.
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Rules For Combining REA Diagrams
Merging two transaction cycles on a commoneventmay also affect the minimum cardinalitiesbetween the merged event and the agentparticipating.
Same basic reasoning: A cash disbursementin the expenditure cycle is a payment
to a supplier, so every cash event is linked to at least onesupplier.
A cash disbursementin the payroll cycle is a payment to
an employee, so every cash event is linked to at least oneemployee.
A cash disbursementin the two cycles combined is linkedeither to a supplier or an employee, but not both.
Changes the minimum cardinality between event and
agent from one to zero.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The cardinality between disburse cashand
suppliersis now (0,N) instead of (1,N) as it
was in the expenditure cycle.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The cardinality between disburse cashand
employees (payees)is now (0,N) instead of
(1,N) as it was in the payroll cycle.
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Rules For Combining REA Diagrams
Validating the Accuracy of Integrated REA Diagrams
Chapter 17 presented three basic principles fordrawing REA diagrams for individual cycles.
The preceding discussion on combining diagramsadds two more rules.
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Rules For Combining REA Diagrams
An integrated REA diagram must satisfy thesefive rules:1. Every event must be linked to at least one resource.
2. Every event must be linked to at least two agents.
3. Every event that involves disposition of a resourcemust be linked to an event that involves acquiring aresource. (Reflects give-get economic duality).
4. Every resource must be linked to at least one eventthat increases the resource and one that decreases it.
5. If event A can be linked to more than one other
event, but cannot be linked simultaneously to all ofthose other events, then the REA diagram should showthat event A is linked to a minimum of zero of each ofthose other events.
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Rules For Combining REA Diagrams
The preceding five rules can be used todevelop an integrated REA diagram andcan also be used as check figures tovalidate the accuracy of a completed
diagram.
Our integrated diagram is not yet completebecause the fourth rule is not satisfied for the
employee timeresource. Rule 4: Every resource must be linked to at least
one event that increases it and one event thatdecreases it.
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Learning Objective 3
Build a set of tables to implement an REA
model of an AIS in a relational database.
I l ti REA Di i
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Implementing an REA Diagram in a
Relational Database
Once an REA diagram has been developed, it canbe used to design a well-structured relationaldatabase.
Creating a set of tables from an REA diagramautomatically results in a well-structured relationaldatabase that is not subject to the update, insert,and delete anomalies.
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
The three steps to implementing an REAdiagram in a relational database are: Create a table for:
Each distinctentity in the diagram.
Each many-to-many relationship.
Assign attributes to appropriate tables.
Use foreign keys to implement one-to-one andone-to-many relationships.
As discussed previously, REA diagrams willdiffer across organizations because ofdifferences in business policies.
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
The three steps to implementing an REAdiagram in a relational database are: Create a table for:
Each distinctentity in the diagram.
Each many-to-many relationship.
Assign attributes to appropriate tables.
Use foreign keys to implement one-to-one andone-to-many relationships.
As discussed previously, REA diagrams willdiffer across organizations because ofdifferences in business policies.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Our integrated diagram has
seven event entities.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
There are three distinct agent entities.
The first is the customer.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomers
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The second agent entity is
the suppliers.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
The third agent entity is the employee. We label
the types of employees to make the diagram more
understandable, but they all go in one table.
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
Total entities to be represented in separate
tables:
Events 7
Resources 2
Agents 3
12
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
The three steps to implementing an REAdiagram in a relational database are: Create a table for:
Each distinctentity in the diagram.
Each many-to-many relationship.
Assign attributes to appropriate tables.
Use foreign keys to implement one-to-one andone-to-many relationships.
As discussed previously, REA diagrams willdiffer across organizations because ofdifferences in business policies.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
Inventory
CustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
Employee
TimeTime WorkedEmployees (as
Payees)
Lets count the many-to-many relationships.
4
5
1
2
3
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
Total number of tables in database:
Events 7
Resources 2
Agents 3
12
Plus: Many-to-Many Relationship 5
17
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
Table names for these 17 entities correspondto the names of the entities in the REAdiagram. The tables for M:N relationships are hyphenated
concatenations of the entities involved in therelationship.
Makes it easier:
To verify that all necessary tables have been
created. To use the REA diagram as a guide when
querying the database.
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
Table names for our integrated diagram:
Order Inventory
Receive Inventory
Disburse Cash
Take Customer Order
Sales
Receive Cash
Time Worked Inventory
Cash
Employees
Customers
Suppliers
Order Inventory-Inventory
Receive Inventory-Inventory
Take Customer Order-Inventory
Sales-Inventory Sales-Receive Cash
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
The three steps to implementing an REAdiagram in a relational database are: Create a table for:
Each distinctentity in the diagram.
Each many-to-many relationship.
Assign attributes to appropriate tables.
Use foreign keys to implement one-to-one andone-to-many relationships.
As discussed previously, REA diagrams willdiffer across organizations because ofdifferences in business policies.
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
Step 2: Assign attributes to each table The next step is to determine which attributes
should be included in each table.
Primary keys attribute
Non-key (other) attributes The designer needs to interview users and
management to identify which facts need to beincluded in the database.
Should use the REA diagram to determine inwhich tables those facts should be placed.
Implementing an REA Diagram in a
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Implementing an REA Diagram in a
Relational Database
Identify primary keys Every table in a relational database must have a
primary key. The primary key is an attribute or combination of
attributes that uniquely identifies each row in a table.
It is typically a numeric identifier.
The primary key is usually a single attribute.
However for M:N relationship tables, it consists oftwo attributes that represent the primary key ofeach linked entity.
Example: The primary key for a sales-inventorytable might be Invoice No-Item No.
These multiple-attribute primary keys arecalled concatenated keys.
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Implementing an REA Diagram in a
Relational Database
Keys for the entity tables weve identified might bespecified as follows: ORDER INVENTORYPurchase Order No.
RECEIVE INVENTORYReceiving Report No.
DISBURSE CASHCheck No.
TAKE CUSTOMER ORDERSales Order No. SALESInvoice No.
RECEIVE CASHCash Receipt No.
TIME WORKEDTimecard No.
INVENTORYItem No.
CASHAccount No. EMPLOYEESEmployee No.
CUSTOMERSCustomer No.
SUPPLIERSSupplier No.
The M:N relationshiptables would have keys
that are combinations
of the keys for the two
related tables.
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Implementing an REA Diagram in a
Relational Database
Keys for the entity tables weve identified might bespecified as follows: ORDER INVENTORYINVENTORY: Purchase Order No.,
Product No.
RECEIVE INVENTORYINVENTORY: Receiving Report No.,
Product No. TAKE CUSTOMER ORDERINVENTORY: Sales Order No.,
Product No.
SALESINVENTORY: Invoice No., Product No.
SALESRECEIVE CASH: Invoice No., Remittance No.
Example: The primarykey for the sales-
receivecashtable
would be invoice no.-
cash receipt no.
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Implementing an REA Diagram in a
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Assign other attributes to appropriate tables
Attributes other than the primary key are alsoincluded in tables:
To provide for accurate transaction processing and the
production of financial statements; or
To facilitate effective management of the entitysresources, events, and agents.
Any attribute in a table must be a fact about the
object represented by the primary key. Example: Information about the customer, such
as his address or phone number, should beincluded in the customer table, not the sales
table.
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Assign other attributes to appropriate tables Some non-key attributes even need to be stored in
M:N tables.
Example: The inventory-sales table may include aquantity sold attribute. The quantity sold cant be placed in the inventorytable,
because there can be many sales of any particularinventory item, and each sale produces a differentquantity ordered.
The quantity sold cant be placed in thesalestable,because an individual sale can include several
inventory items. The quantity sold is placed in thesales-inventorytable so
that you can determine how much of EACH inventoryitem was ordered with EACH sale.
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Assign other attributes to appropriate tables
Price and cost data
Information about prices and costs are stored
as attributes in several different tables. Theinventorytable stores the suggested list
price, which is generally constant for the fiscalperiod.
Thesales-inventorytable stores the actualsales price, which can vary during the year.
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Assign other attributes to appropriate tables
Price and cost data
Just like sales prices, the standard and actual purchasecosts of each item are stored in different tables.
General rule:
Time-independent data (such as standard costs or listprices) should be stored as an attribute of a resourceoragent.
Data that vary across time (such as actual costs andprices) should be stored with event entities orin M:Nrelationshipsthat involve at least one event.
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Implementing an REA Diagram in a
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Assign other attributes to appropriate tables Cumulative Data
Attributes like quantity on hand or accountbalance are cumulative data.
Quantity on hand is calculated as: Sum of quantities purchased from the table
linking inventoryto thereceive inventoryevent.
LESS: Sum of quantity sold from thesales-
inventorytable. Customer balance:
Sum of all sales to the customer.
LESS: Sum of all cash receipts from customer.
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p e e g a ag a a
Relational Database
Assign other attributes to appropriate tables Cumulative Data
The preceding types of items do not have to be
stored and can be calculated.
However, explicitly storing them may improve
response time to queries.
Should be done if the DBMS has the capability toautomatically update these summary values as eachnew event occurs.
Otherwise they will be incorrect.
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p g g
Relational Database
The three steps to implementing an REAdiagram in a relational database are: Create a table for:
Each distinctentity in the diagram.
Each many-to-many relationship.
Assign attributes to appropriate tables.
Use foreign keys to implement one-to-one andone-to-many relationships.
As discussed previously, REA diagrams willdiffer across organizations because ofdifferences in business policies.
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p g g
Relational Database
Step 3: Use foreign keys to implement 1:1and 1:N relationships. Many-to-many relationships have been
implemented by the creation of separate tables.
One-to-one and one-to-many relationships stillneed to be implemented in the database.
But it is usually more efficient to implement themby the creation of foreign keys.
A foreign key is an attribute of one entity that is
the primary key of another entity. Customer numbermight appear in the customer
table as a primary key and in thesalestable as aforeign key.
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p g g
Relational Database
Using foreign keys to implement one-to-onerelationships Can be implemented by including the primary
key of one entity as a foreign key in the other.
Minimum cardinalities may suggest which choiceis more efficient. Usually, best to insert the primary key of the entity that
can occur a minimum of one time as a foreign key in theentity that can occur a minimum of zero times.
When there are two sequential events, the primary key of
the event that occurs first is usually the foreign key in theevent that occurs second.
Provides better control, as the employee who updatesthe table for the second event does not have to accessthe table for the event that occurred first.
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Employees
(Supervisor)
Order
InventoryEmployees
Suppliers
Inventory
Take Cust.
OrderCustomer
Employees
(Salesperson)
SalesReceive
InventoryCustomerSuppliers
Employees
(Cashier)Receive Cash
Employees
(Cashier)Disburse Cash Cash
EmployeeTime
Time WorkedEmployees (as
Payees)
This relationship is a 1:1 relationship, but the
minimum on both sides is zero.
Because the entities represent sequential events,
we will follow the practice of placing the primary
key of the event that occurs first (take customer
order) as a foreign key in the event that occurs
second (sales).
Take Customer
Order
Sales
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Take Customer Order Order No. Call No. Date, Time, Total Amount
Sales Invoice No. Order No. Date, Time, Total Amount,
Invoice Sent (Y/N)
p g g
Relational Database
Table Name
Primary
Key
Foreign
Key Other Attributes
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Using foreign keys to implement one-to-manyrelationships
Place the primary key of the entity that can occuronly once as a foreign key in the entity that canoccur many times.
Example: The primary key forsalesperson(whichcan occur only once per sale) is a foreign key inthesalestable (which can occur many times for
a particular salesperson).
If you tried to do the opposite, you would nothave flat tables.
p g g
Relational Database
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p g g
Relational Database
It would be useful to step through a completeprocess of converting an REA diagram into adatabase model.
The integrated diagram is too extensive to providea good, short example.
Therefore, lets use a simple, individual transactioncycle for purposes of this example only.
Example
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Example
Below is a sample REA diagram for a very simplerevenue cycle.
Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
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Example
Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
Our first step is to create a table for each event,resource, agent, and many-to-many relationship.
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Example
Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
There are two events.
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Example
Table Name Primary Key Foreign Key Other Attributes
Sale
Receive Cash
Example
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Example
Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
There are two resources.
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Example
Table Name Primary Key Foreign Key Other Attributes
Sale
Receive Cash
InventoryCash
Example
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Example
Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
There are two types of agents: customers andemployees.
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Example
Table Name Primary Key Foreign Key Other Attributes
Sale
Receive Cash
InventoryCash
Customer
Employee
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Example
Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
There is one many-to-many relationship.
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Example
Table Name Primary Key Foreign Key Other Attributes
Sale
Receive Cash
InventoryCash
Customer
Employee
Sales-Inventory
Example
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Example
The next step is to assign attributesto each table.
These attributes include the assignment of primarykeys.
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Example
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Example
The other attributes include facts the companywishes to collect that describe each entity.
Example
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Example
Table Name Primary Key Foreign Key Other AttributesSale Sale No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Receipt Date, Receipt
Time, Total Amount of
Recei tInventory Item No. Description, List Price
Cash Account No. Bank, Type of Account
Customer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,Job Title
Sales-Inventory Sale No.-Item
No.
Quantity Sold, Actual Price
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Example
The final step involves using foreign keys toimplement the 1:1 and 1:N relationships.
The relationship between customer and
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
sales is a 1:N relationship. We make the
primary key for the entity that occurs only
once (customer) serve as a foreign key inthe entity that can occur many times (sale).
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Example
Table Name Primary Key Foreign Key Other Attributes
Sale Sale No. Customer No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Receipt Date, Receipt Time,
Total Amount of Receipt
Inventory Item No. Description, List PriceCash Account No. Bank, Type of Account
Customer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,
Job Title
Sales-Inventory Sale No.-ItemNo.
Quantity Sold, Actual Price
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
Likewise, the primary key for employeeshould be aforeign key in thesalestable.
Example
Example
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Table Name Primary Key Foreign Key Other AttributesSale Sale No. Customer No., Employee No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Receipt Date, Receipt Time,
Total Amount of Receipt
Inventory Item No. Description, List Price
Cash Account No. Bank, Type of AccountCustomer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,
Job Title
Sales-Inventory Sale No.-Item
No.
Quantity Sold, Actual Price
Example
Example
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
The primary key for employeeshould also be aforeign key in thereceive cashtable.
Example
Example
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Table Name Primary Key Foreign Key Other AttributesSale Sale No. Customer No., Employee No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Employee No. Receipt Date, Receipt Time,
Total Amount of Receipt
Inventory Item No. Description, List Price
Cash Account No. Bank, Type of AccountCustomer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,
Job Title
Sales-Inventory Sale No.-Item
No.
Quantity Sold, Actual Price
Example
Example
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
The primary key for customershould also be aforeign key in thereceive cashtable.
Example
Example
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Table Name Primary Key Foreign Key Other AttributesSale Sale No. Customer No., Employee No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Employee No., Customer No. Receipt Date, Receipt Time,
Total Amount of Receipt
Inventory Item No. Description, List Price
Cash Account No. Bank, Type of AccountCustomer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,
Job Title
Sales-Inventory Sale No.-Item
No.
Quantity Sold, Actual Price
p
The relationship betweensalesandreceive cashis1:1 Two guidelines will produce the same result
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
1:1. Two guidelines will produce the same result. Put the primary key of the event with the minimum of one
(sales) as a foreign key in the event with the minimum of
zero (receive cash); or Put the primary key of the event that occurs first (sales) as a
foreign key in the event that occurs second (receive cash).
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Table Name Primary Key Foreign Key Other Attributes
Sale Sale No. Customer No., Employee No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Employee No., Customer No.,
Sale No.
Receipt Date, Receipt Time,
Total Amount of Receipt
Inventory Item No. Description, List Price
Cash Account No. Bank, Type of Account
Customer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,
Job Title
Sales-Inventory Sale No.-Item
No.
Quantity Sold, Actual Price
p
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
The relationship betweensalesand inventoryis amany-to-many relationship and was alreadyimplemented by the creation of a separate table.
p
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Sale
Receive
Cash
Inventory
Cash
Customer
Employee
Customer
In the relationship between cashandreceive cash, theprimary key for the event that occurs once (cash) should be aforeign key in the event that occurs many times (receivecash).
p
Example
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Table Name Primary Key Foreign Key Other Attributes
Sale Sale No. Customer No., Employee No. Date of Sale, Time of Sale,
Total Amount of Sale
Receive Cash Cash Rect. No. Employee No., Customer No.,
Sale No., Account No.
Receipt Date, Receipt Time,
Total Amount of Receipt
Inventory Item No. Description, List Price
Cash Account No. Bank, Type of Account
Customer Customer No. Customer Name, Customer
Address, Customer Phone
Employee Employee No. Employee Name, Employee
Address, Employee Phone,
Job Title
Sales-Inventory Sale No.-Item
No.
Quantity Sold, Actual Price
p
Implementing an REA Diagram in a
Relational Database
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Relational Database
Completeness check The list of attributes that users and management
want included in the database provide a meansto check and validate the implementation
process. Each of those attributes should appear in at least
one table as a primary key or an other attribute.
Checking this list may reveal that a particular
attribute has not been assigned or may evenindicate the need to modify the REA diagramitself.
Implementing an REA Diagram in a
Relational Database
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Relational Database
The need to modify the REA diagram as a result ofthis completeness check is not unusual.
In fact, it is often helpful to create tables and assignattributes before completion of the REA diagram
helps clarify what each entity represents.
When all attributes have been assigned, the basicrequirements for a well-structured relationaldatabase can be used as a final accuracy check:
Every table has a primary key. Other attributes in the table are either a fact that describes
the entity or a foreign key used to link tables.
Every attribute in every table is single-valued.
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Learning Objective 4
Explain how to write queries to retrieve
information from an AIS relational
database built according to the REA data
model.
Using REA Diagrams to Retrieve Information
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from a Database
We have shown how to use the REA data model to guidedesign of an AIS that will efficiently store information about anorganizations business activities.
Lets now discuss how to use our completed diagrams andtables to retrieve information for performance evaluation.
It may appear that a number of traditional AIS elements aremissing, e.g.:
Journals
Ledgers
Accounts receivable balances
The information is simply present in a different format.
Using REA Diagrams to Retrieve Information
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from a Database
Creating Journals and Ledgers Although journals and ledgers do not appear explicitly in
an REA diagram, they can be created through appropriatequeries.
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from a Database
Deriving journals from queries In a traditional AIS, journals provide a chronological listing
of transactions.
In a relational database designed via an REA model, evententities store information about transactions.
The information found in a journal is contained in thetables used to record data about events.
Each row in the sales journal, for example, containsinformation about a particular sales transaction.
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from a Database
Consequently: A sales journal can be produced by writing a query that
displays the appropriate entries in thesalesandsales-inventorytables for a given period.
But doing so would not necessarily create the traditionaljournal.
The simplest query would display every entry in the eventtable (both credit and cash sales).
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from a Database
To create a traditional sales journal from thesalesandsales-inventorytables, you would: Create a query that prints only sales transactions
for which there is not a matching transaction inthereceive cashandsales-receive cashtables
for: The same customer
The same date
In another words, if a cash receipt was notobtained from that customer on the same date in
the exact amount of the sale, the assumption ismade that the transaction was a credit sale.
Similar processes can be followed to writequeries to produce other special journals.
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from a Database
Ledgers Ledgers are master files that contain cumulative
information about specific accounts.
In a relational database designed with the REA
model, resource and agent entities containpermanent information carried from one year tothe next.
Much information about assets that is traditionallyrecorded in ledgers would be stored in the
resource tables.
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from a Database
Example: Each row in the equipmenttable would contain information
about a specific piece or class of machinery, includingcost, useful life, depreciation method, and estimatedsalvage value.
Each row in the cashtable contains information about aspecific account for cash or cash equivalents.
Each row in the inventorytable contains information abouta specific inventory item.
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from a Database
Each resource account is affected byincrement and decrement events:
Equipment is bought and used.
Cash is received and paid out.
Inventory is bought and sold.
Queries to display the current cumulative
balances for these accounts must reference:
The appropriate table for that resource entity; and
The event tables that affect it.
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from a Database
Example: A query to display the current balance ina specific bank account would reference: The cashresource table to identify the account number
and beginning balance for the period.
The cash receiptstable to identify inflows to the account.
The cash disbursementstables to identify outflows duringthe period.
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from a Database
Many financial statement accounts are representedas resources in the REA model.
Claims are an important exception.
There is not an entity for accounts receivable (claims we
have against our customers) or accounts payable (claimsour suppliers have against us).
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o a a abase
Accounts receivable represents salestransactions for which customer paymentshave not yet been paid.
Can be calculated as: Total sales (from thesalestable) Less: Total cash receipts (from the cash receipts
table)
If there is a foreign key for cash receiptsin
thesalestable, a shortcut would be to addup all sales in thesalestable where theforeign key for cash receiptsis null (i.e., thecash has not been received).
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Accounts payable represents purchase transactionsfor which cash disbursements have not yet beenmade.
Can be calculated as:
Total receipts of inventory from thereceive inventorytable
Less: Total cash disbursements from the cash disbursementstable
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To derive account receivable balances foreach customer, the query logic must beexpanded to reference the customertableand include a group by command toperform the calculation separately for each
customer. Result would be a table with a row for each
customer and a column showing the customersoutstanding balance.
Another query could sum the balances in thistable to determine total accounts receivable.
A similar procedure can be followed todetermine individual supplier balances inaccounts payable.
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Generating Financial Statements Weve established that queries can be written to
generate journals and ledgers, which produceinformation to be included in financial
statements. To produce the desired outputs, it is necessary to
have both:
Knowledge about the structure of financial statements
and the meanings of individual accounts; and An understanding of the REA data model, especially the
meaning of various cardinalities.
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Creating Managerial Reports A major advantage of the REA model is its integration of
non-financial and financial data to make both types ofdata easily accessible to management.
For example, if the sales table includes the time of sale, this
information could be used to plan staffing needs. Other non-financial data from internal and external sources
can be included in the system.
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The general ledger in traditionally designed AISscontains data only about the financial aspects oftransactions, and non-financial data has to bestored in a separate database or informationsystem. The existence of separate systems makes it more difficult for
management to easily and quickly access the neededinformation.
Also creates opportunities for more data entry errors andinconsistencies, reducing the utility of the reports.
REA model advantage is the ability to easilyintegrate information that traditionally appears infinancial statements with other, nonfinancialinformation.
SUMMARY
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In this chapter, youve learned: How REA diagrams for individual transaction cycles are integrated
into a single comprehensive organization-wide REA diagram.
How tables are constructed from the REA model of an AIS in arelational database.
How queries can be written to retrieve information from an AISrelational database built according to the REA data model.
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End of Chapter 18