REA DIAGRAM - Assignment Worker (2022)


REA Diagram assignment “James Company purchases pipes and fittings from a variety of vendors, both wholesalers and manufacturers. All vendors must be approved before a purchase order can be placed with a particular vendor. Only employees classified as purchase agents have authority to place purchase orders. James tracks inventory by a unique inventory item number. When merchandise received at the receiving dock is processed, only one receiving clerk counts the inventory items and records which items were received and enters quantities on the receiving report. Create an REA diagram for James Corporation’s expenditure cycle as described above. Be sure to include all relevant entities, relationships, attributes, key attributes, and cardinalities (no need to do participation cardinalities).” I have attached a set of slides that explain the REA process. Slide #45 gives an example of an REA diagram for the expenditure cycle. Your answer should be somewhat similar to Slide #45.

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How can rea diagram help an auditor understand a client's business processes? ›

17.3 How can REA diagrams help an auditor understand a client's business processes? An REA diagram presents a model of the company's database. Included in the model is a representation of all the tables contained in the database as well as all of the relationships that exist between the tables within the database.

Which types of entities are included in REA diagrams? ›

– The REA data model prescribes a basic pattern for how the three types of entities (resources, events, and agents) should relate to one another. Rule 1: Each event is linked to at least one resource that it affects. Rule 2: Each event is linked to at least one other event.

How do you make a rea diagram? ›

Developing an REA diagram for a specific transaction cycle consists of three steps:
  1. STEP ONE: Identify the events about which management wants to collect information.
  2. STEP TWO: Identify the resources affected by the events and the agents who participated.
  3. STEP THREE: Determine the cardinalities of the relationships.

How would Accounts payable be reflected in an REA diagram? ›

Accounts payables are not represented on an REA diagram. Since accounts payable represent the purchases made by an organization that has not been paid to the supplier. The payable is recorded as an artifact of the reporting time period and thus is not a resource, event, or an agent.

What is the purpose of REA model? ›

REA is an acronym for resources, events, and agents. The REA model views accounting data collection as a system to collect data about the resources, events, and agents within business processes. Business processes involve events in which resources are exchanged by agents. An example of such an event is a sale.

How would you help a client understand your process? ›

6 Easy Steps to Help You Understand Your Client's Business
  1. Get a grasp on your client's brand and industry trends. ...
  2. Do your due diligence on your client's products and/or services. ...
  3. Research the competition. ...
  4. Understand your client's customers. ...
  5. Talk to your client about their business KPIs and goals.
19 Mar 2019

What is the minimum number of agents that must participate in each REA event? ›

The essential feature(s) of the REA template include the following: each event is linked to at least two participating agents. each event is linked to at least one resource that it affects. each event is linked to at least one other event.

What are the 3 main components of entity relationship diagram? ›

What are the components of an entity-relationship diagram? ER diagrams or ERD's are composed of three main elements: entities, attributes, and relationships.

What is Rule 3 of the REA data model? ›

38 THE REA DATA MODEL Rule 3: Every event entity must be linked to at least two participating agents For accountability, organizations need to be able to track actions of employees. Also need to monitor the status of commitments and exchanges with outside parties. Each event links to at least two participating agents.

What are the key elements of the REA model? ›

The base of the REA model level is the operational level containing three concepts: Resource, Event and Agent. An economic event is divided into incremental or decrement event. These events are instances of the parent concept Event that defines their internal structure.

How is the REA data model used in the design process? ›

The REA model provides guidance for database design by identifying what entities should be included and by prescribing how to structure relationships among those entities. The REA data model was developed specifically for use in designing accounting information systems.

How do you explain an ER diagram for a presentation? ›

Below points show how to go about creating an ER diagram.
  1. Identify all the entities in the system. An entity should appear only once in a particular diagram. ...
  2. Identify relationships between entities. Connect them using a line and add a diamond in the middle describing the relationship.
  3. Add attributes for entities.
19 Oct 2022

What is the best way to explain accounts payable? ›

Definition: When a company purchases goods on credit which needs to be paid back in a short period of time, it is known as Accounts Payable. It is treated as a liability and comes under the head 'current liabilities'. Accounts Payable is a short-term debt payment which needs to be paid to avoid default.

What is 3 way matching in accounts payable? ›

Three-way matching is an accounts payable process that checks that the details on a purchase order, the supplier's invoice and the delivery receipt match before an invoice is paid.

How do you monitor accounts payable? ›

Managing the accounts payable process
  1. The most important thing: accuracy. ...
  2. Key steps in the AP process flow. ...
  3. Centralise your invoice payments. ...
  4. Track every due payment clearly. ...
  5. Know exactly who authorizes payments. ...
  6. MineralTree - Capture invoices in small doses. ...
  7. Dooap - Pay invoices in larger batches.
30 Dec 2021

What is the REA core pattern? ›

REA core pattern is a conceptual structure of relationships between the resources, events, and agents that constitute the transactional/transformational core of an economic exchange/conversion process.

What are the advantages of the REA model? ›

Thus the REA Model results in a more simplified relational data base which significantly reduces the chance of data duplication, data redundancy, and as a result, a data base that requires less maintenance and is less prone to error.

How does the REA approach improve efficiency? ›

more efficient operations by helping identify non-value-added activities, by storing financial and nonfinancial data in the same central database, and greater support for management decisions; increased productivity through the elimination of non-value-added activities; competitive advantages.

How do you answer how would you handle a challenging client? ›

How to answer "How would you deal with a difficult customer?"
  1. Listen carefully to the customer. ...
  2. Repeat what you've just heard. ...
  3. Actively sympathize / apologize. ...
  4. Take responsibility to resolve the issue. ...
  5. Remain calm and compassionate.
15 Dec 2021

How do you tell a client they need to make a decision? ›

Just ask them in a way that lets the client know that you genuinely want to help. In order to do that, we have to fully understand their needs, and occasionally do what is necessary to help get them off the fence.

How do you explain a complicated process to a customer? ›

For complex or technical matters, think of the different ways you can explain by showing:
  1. A whiteboard presentation.
  2. A flowchart.
  3. A series of simply-crafted slides that allow you to elucidate the concept in real time.
  4. A cartoon that encapsulates a concept.
  5. A video that demonstrates a technical process in action.
9 Oct 2018

Which of the following is one of the rules that an integrated REA diagram must satisfy? ›

An integrated REA diagram must satisfy the rule that every event must be linked to at least one resource.

What is REA data model? ›

Project Description. The REA Model learning object is a self-paced digital resource developed for the Accounting Information Systems course to support self-directed learning.

How many types of relationships are possible between entities? ›

Here, you will learn how entity framework manages the relationships between entities. Entity framework supports three types of relationships, same as database: 1) One-to-One 2) One-to-Many, and 3) Many-to-Many.

Can a relation have 3 entities? ›

A ternary relationship is an association among three entities. This type of relationship is required when binary relationships are not sufficient to accurately describe the semantics of the association.

What are the 3 types of relationships in a database explain? ›

There are three types of relationships between the data you are likely to encounter at this stage in the design: one-to-one, one-to-many, and many-to-many. To be able to identify these relationships, you need to examine the data and have an understanding of what business rules apply to the data and tables.

What are the 3 types of relationship in relational database diagram? ›

There are 3 different types of relations in the database: one-to-one. one-to-many, and. many-to-many.

What are the 5 steps under data modeling? ›

  • Step 1: Gathering Business requirements: ...
  • Step 2: Identification of Entities: ...
  • Step 3: Conceptual Data Model: ...
  • Step 4: Finalization of attributes and Design of Logical Data Model. ...
  • Step 5: Creation of Physical tables in database:

What are the 3 steps of data Modelling? ›

Data modeling occurs at three levels—physical, logical, and conceptual. A physical model is a schema or framework for how data is physically stored in a database. A conceptual model identifies the high-level, user view of data.

What is the first step to implementing an REA diagram in a relational database? ›

The three steps to implementing an REA diagram in a relational database are: STEP 1: Create a table for each distinct entity in the diagram and each many-to-many relationship. STEP 2: Assign attributes to appropriate tables. STEP 3: Use foreign keys to implement one-to-one and one-to-many relationships.

Which type of events are included in an REA model quizlet? ›

REA modeling embraces two classes of events: economic events and support events. At least two REA agents participate in each economic event. The events depicted on an REA diagram are transformed into computer processes while the resources and agents become relational database tables.

Can a Stockflow relationship relate two economic resources with each other? ›

A stock-flow models an association between exactly one economic event and exactly one economic resource. An economic event will affect most of the time one economic resource only, but it may affect multiple ones. Thus, an economic event may have one up to many stock-flows connected.

What are the 4 different types of data models? ›

The three primary data model types are relational, dimensional, and entity-relationship (E-R). There are also several others that are not in general use, including hierarchical, network, object-oriented, and multi-value.

How does UX design collect data? ›

User interviews are an important way of collecting information for data-driven design. Surveys are also powerful tools for collecting data. UX research methods also include card sorting, contextual interviews with actual users, focus groups, surveys, and heuristic analyses.

What is ER diagram explain with example? ›

ER Diagram is a visual representation of data that describes how data is related to each other using different ERD Symbols and Notations. Following are the main components and its symbols in ER Diagrams: Rectangles: This Entity Relationship Diagram symbol represents entity types. Ellipses : Symbol represent attributes.

What are the 4 types of diagram? ›

There are four main organizational chart types: vertical, horizontal, matrix and creative.

Can I make ER diagram in Word? ›

Using Microsoft Word

This is possible using the app's SmartArt graphic feature that helps you to design quality illustrations through templates. Learn how to create ERD by following the steps below. In a new blank document open the “Insert” tab. Next, open the “SmartArt” option to choose a template.

Is accounts payable a difficult job? ›

Yes, accounts payable can be a difficult job.

This role is primarily focused on data entry and management to ensure that all aspects of a company's accounts are maintained correctly which can make the job difficult because minor mistakes can have extreme consequences.

Can you explain what accounts payable is in your own words? ›

Accounts payable (AP) are amounts due to vendors or suppliers for goods or services received that have not yet been paid for. The sum of all outstanding amounts owed to vendors is shown as the accounts payable balance on the company's balance sheet.

How do I make accounts payable easier? ›

5 Ways to Improve Your Accounts Payable Process
  1. Move Toward a Paperless Environment. ...
  2. Process Invoices Using Receipt Bank. ...
  3. Automate Payments Using Plooto. ...
  4. Use Online Accounting Software to Track Invoices and Payments. ...
  5. Create an Automated Accounts Payable Process.

Who performs 3 way match? ›

Ultimately, your PO, invoice, and order receipt should all agree. In the event that they do, you have a successful three way match, which can be carried forward to your accounts payable for fulfillment.

Is invoice before or after payment? ›

Once a customer pays their bill, the company will provide them a receipt which is a proof of payment. An invoice comes before a payment has been, while a receipt comes after the payment has been made.

What is PO and Non PO invoice? ›

PO invoices have an attached purchase order. – Non-PO invoices do not have an attached purchase order. – Mainly used for direct procurement. – Commonly used for indirect procurement. – Faster approvals and processing.

What are the 4 functions of accounts payable? ›

In a typical Accounts Payable Clerk role, the job description typically includes the following responsibilities: Calculating, posting business transactions, invoice processing, verifying financial data for use in maintaining records.

What is KPI in accounts payable? ›

To identify bottlenecks and maximize the efficiency of the accounts payable department, companies should define key performance indicators (KPIs) for the accounts payable department.

Why auditors should understand client business processes? ›

Auditors need an understanding of the client's business and industry because the nature of the business and industry affect business risk and the risk of material misstatements in the financial statements. Auditors use the knowledge of these risks to determine the appropriate extent of further audit procedures.

What is the purpose of a business process diagram? ›

A business process diagram is a visual representation of a process that your company carries out to achieve a goal. It uses standardized symbols to describe each step of the process. You can use a business process diagram to depict anything from onboarding new hires to developing and launching a new product.

Why is it important for an auditor to understand a client's business environment? ›

The auditor must obtain a sufficient understanding of the entity and its envi- ronment, including its internal control, to assess the risk of material misstate- ment of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures.

What is the benefit of creating a business process diagram? ›

These diagrams concisely explain a business' thought process or approach to certain work, and they can help employees or stakeholders understand a project's goals and processes. You can create this diagram with different shapes to detail various aspects of the process.

What are the 5 more important duties of an auditor? ›

What does an auditor do?
  • collating, checking and analysing spreadsheet data.
  • examining company accounts and financial control systems.
  • gauging levels of financial risk within organisations.
  • checking that financial reports and records are accurate and reliable.
  • ensuring that assets are protected.

What factors does the auditor consider before accepting a client? ›

Points to consider before accepting the Audit
  • Background information.
  • Eligibility.
  • Management assessment.
  • Investigation of industry involvement and risk factor.
30 Sept 2020

What is the most important phase in the audit process? ›

The completion stage of the audit is of crucial importance. It is during the completion stage that the auditor reviews the evidence obtained during the audit together with the final version of the financial statements with the objective of forming the auditor's opinion.

How do you explain a process diagram? ›

Process diagrams, called “flow diagrams” by TOGAF, are used to model the sequence of activities within a process. Process modeling formalizes practices and describes the manner in which they should take place.

What are the 3 types of process flow diagram? ›

In 1987, Andrew Veronis published a book called Microprocessors: Design and Application that described the following three types of flowcharts: System flowchart. General flowchart. Detailed flowchart.

Why the diagram is important? ›

Diagrams are essential to provide a clear, unambiguous picture. They can be put together in meetings, can make discussions easier than lots of text and are quicker and easier to do iterations and re-work.

Why is it important to understand client needs? ›

Knowing and understanding customer needs is at the centre of every successful business, whether it sells directly to individuals or other businesses. Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests.

Why is it important to assess first the client before accepting an engagement? ›

The engagement may be an audit, or it may be a non-audit or assurance engagement. Acceptance decisions are crucially important, because new clients and/or engagements can pose threats to objectivity, or create risk exposure to the firm, which must be carefully evaluated.

Why is it important to understand your client? ›

Know your customers better because only they can help you get more lead and more business. Understanding customers is the key to giving them good service which in turn results into strong customer relationships and new sales through positive word-of-mouth recommendation.

What is the purpose of a business process diagram BPD? ›

Business process design (BPD) is the act of creating a new process or workflow from scratch. It's different from business process redesign, which as the name implies, means taking an already existing process and improving it.

What are the 4 benefits of process approach? ›

Process approach advantages
  • Coordination of actions between organizational units inside the scope of the process;
  • Process result orientation;
  • Improving the effectiveness and efficiency of the organization;
  • Clarity of actions to achieve the result;
  • Improving the predictability of the results;


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