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Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127

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BuyFindarrow_forward

Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127
Textbook Problem

Examine Figure 6.18, which contains the REA model for Hera Industrial Supply (HIS). The model is partially completed; it includes all entities and relationships, but it does not include cardinalities or descriptions of the relationships (which would appear in diamonds on the connecting lines between entities). HIS sells replacement parts for packaging machinery to companies in several states. HIS accepts orders via telephone, fax, and mail. When an order arrives, one of the salespersons enters it as a sales order. The sales order includes the customer’s name and a list of the inventory items that the customer wants to purchase. This inventory list includes the quantity of each inventory item and the price at which HIS is currently selling the item. When the order is ready to ship, WIS completes an invoice and records the sale. Sometimes, inventory items that a customer has ordered are not in stock. In those cases, HIS will ship partial orders. Customers are expected to pay their invoices within 30 days. Most customers do pay on time; however, some customers make partial payments over two or more months. List each entity in the REA model, and identify it as a resource, event, or agent. Using Microsoft Visio, redraw the REA model to include the diamonds for each relationship and include an appropriate description in each diamond.

FIGURE 6.18 Partially Completed REA Model of the Hera Industrial Supply Sales Business

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Summary Introduction

To list: Each entity in REA model and identify it as a resource, event or agent and create diagram which shows the REA model which includes the diamonds for each relationship and a suitable description in each diamond

Explanation

Resources-Events-Agents (REA) model:

  • This model tells how the accounting system can be re-engineered for the computer age. This model helps in eliminating many accounting objects that are not that necessary in the computer age.

Justification:

  • Models are the simplified versions of an entity. It also helps in identifying and understanding the functional aspects of as entity.
  • While developing a REA model for the ordering inventory, the associated resources and agents should be noted.
  • The REA approach to accounting information system should classify events, resources or agents and should collect data about them...

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