Lecture Accounting information systems: Basic concepts and current issues (4/e): Chapter 8 - Robert L. Hurt

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

Learning objectives

1. Compare and contrast view-driven and

event-driven accounting information

systems.

2. Use REA modeling to represent an

event-driven AIS.

3. Use a REA model to design a relational

database for an event-driven AIS.

– 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

Terminology

• Agents (rightmost column)

– People needed to carry out the events

All entities in a REA model are illustrated with rectangles

Resources on the left, events in the middle, agents on the

right.

purchase orders

(“0”)

• Every order involves exactly one customer

(“1”)

• A single purchase requisition can

include multiple inventory items

(“*”)

a) For each “x,” what is

the minimum number

of “y?”

b) For each “x,” what is

the maximum number

of “y?”

• Set 2

a) For each “y,” what is

the minimum number

of “x?”

b) For each “y,” what is

the maximum number

of “x?”

Cardinalities

• Set 1

a) For each inventory item, what is the smallest

number of “buy inventory” transactions?

• Hint: minimums are either 0 or 1

• Answer: 1

b) For each inventory item, what is the greatest

number of “buy inventory” transactions?

• Hint: maximums are either 1 or * (many)

• Answer: * (many)

Cardinalities

Inventory (1,*) Buy inventory

Every inventory item can be bought one to many times

Every inventory item participates in one to many “buy inventory” events.

Cardinalities

• Set 2

a) For each “buy inventory” transaction, what is

the smallest number of inventory items?

• Hint: minimums are either 0 or 1

• Answer: 1

b) For each “buy inventory” transaction, what is

the greatest number of inventory items?

• Hint: maximums are either 1 or * (many)

• Answer: * (many)

Cardinalities

Inventory (1,*) Buy inventory

Every “buy inventory” event includes one to many inventory items

Cardinalities

Inventory (1,*) (1,*) Buy inventory

Every employee participates

in zero to many “buy

inventory” events.

Every “buy inventory”

event involves exactly one employee.

Database design

• Every “box” in the

REA model needs

at least one

database table

cardinalities are 1

and *, include the

key from the “one

side” in the table

on the “many side.”

cardinalities are * and *, create a

junction table to express the

relationship.

• Follow the rules of normalization.

• Do not store calculated data.

– Vendor ZIP code

– Vendor web site

– And many others!

• Employee table

– Employee ID

– Employee last name

– Employee first name

– Employee department

– Employee job title

– And many others!

Database design

• Inventory table

– Inventory ID

– Inventory item name

– Beginning quantity on hand

– Beginning inventory cost per unit

– Beginning inventory date

Database design

• Buy inventory table

– Purchase order number

– Purchase order date

(1,1)

Remember: When the maximum cardinalities are “one” and

“many,” put the primary key from the “one side” (vendor)

into the table on the “many side” (buy inventory).

Remember: When the maximum cardinalities are

“many” and “many,” create a junction table.

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