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Database Design Using REA Diagram

The document discusses REA (Resources, Events, Agents) diagrams for database modeling. REA diagrams show the relationships between resources, events, and agents to represent business processes and transactions. There are three main entity types in REA - Resources, which are things an organization uses; Events, which are transactions that affect resources; and Agents, which are participants in events. Events are further classified as "get" events that increase resources or "give" events that decrease resources. The document provides steps for constructing a REA diagram, including identifying events, resources, and agents; and defining cardinalities between entities.

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Nigussie Berhanu
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© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
345 views

Database Design Using REA Diagram

The document discusses REA (Resources, Events, Agents) diagrams for database modeling. REA diagrams show the relationships between resources, events, and agents to represent business processes and transactions. There are three main entity types in REA - Resources, which are things an organization uses; Events, which are transactions that affect resources; and Agents, which are participants in events. Events are further classified as "get" events that increase resources or "give" events that decrease resources. The document provides steps for constructing a REA diagram, including identifying events, resources, and agents; and defining cardinalities between entities.

Uploaded by

Nigussie Berhanu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Database design using REA Diagram

The role of accountant in database design

- Accountant provides information to study feasibility and they also


participate feasibility study.
- They also participate in identifying user names
- They participate in coding
- They participate in testing process
- Accountant use database system to process transaction.

Data modeling: - the process of defining database faithfully to represent all


aspect of the company.

- Entity r/ship
- REA diagram

Entity r/ship diagram: - it shows the various entities and their relationship
using graphs.

An entity relationship diagram can be expressed as rectangle to show the


relationship between sales and customers.

Sales Customers

E.g. the sales data main contain quantity of sales, price, discount, addresses,
time for carrying and the customer’s data main use Customers ID, Customers
name, Customers address, etc.

Entity r/ship diagrams can be used to document and understand existing


database and they will be used redesigned a business process.

REA Diagram: - this is another mechanism for data modeling to show the
r/ship b/n various events there are three basic types of entities in REA
diagram.

REA specifies R- Resources- this are what the organization acquires and uses.

E-Event/transaction/- in which the organization engaged.

A- Agents – this are participants

Example – in a process of selling inventory, receiving cash and adjusting cash


account balance identify the resources, events and agents.

Structuring r/ships: - the REA data modeling designs or displays a r/ship


between the resource, event and agent or (entities).
Rule no 1 – each event is linked to at least one resource it affects.

Rule no 2 – Each event linked to at least one other event.

Rule no 3 – Each event is linked to at least two agents or participants.

There are two kinds of events

1. Get event - this are events which increase the quantity of resource.
E.g. collection of cashes, purchase of inventories
2. Give event – this are events which decreases the quantity of resources.
E.g. if you purchase inventory of cashes the get event is that you
receive inventory and the give event is that you pay cash.

Can there be an event with only a get effect or give effect?

These are events which doesn’t have an increase or decrease effect they are
simply plans to purchase an inventory.

It is the r/ship between give and get events this r/ship reflects the basic
business principle that business organizations use up resources in the hope of
acquiring other resources or (transactions).

Each accounting event can be expressed in give and get economic duality. For
internal events such as transfer of raw materials production the employee who
gives up resources is an internal agent (store person) and the external agent is
the one who receive the resources.

Steps in REA diagram design

Step 1 – identify the event

Step 2 – identify the resources affected by the event and the agents participated

Step 3 – Identify cardinalities this are the nature of the r/ships b/n two entities

Step 1 – every REA model represents give and get event in transaction cycle.
The give event reduces resources and the get event increase resources.

Example- in revenue cycle there are 1. Take customer order

2. Fill customers order

3. Bill customers

4. Collect payment

Taking customers order is not a give or get event its commitment.

Filling customer is a give event b/c it reduces inventories.

Billing customers is an exchange of information it doesn’t affect resources


finally collection is get event.
Not that although account receivable is an asset in financial reporting it’s not
represented as a resource in REA model. It shows the difference b/n total sales
and cash collection.

Step 2

Identifying the resource affected which required resource reduced by the give
event and committed.

Example

In checking order selling and collection of cash the give event could be sales
the get event is cash collection. The resources reduce inventories the resource
increase at cash and taking orders in a commitment.

Also identified agents they will always one internal agent which is the employee
and mostly an external agent which is a customer or supplier.

Step 3 cardinallities – thi indicate how many instances or activities of one


entity canbe linked to a specific activities of another entities.

Examples – a company can make many sales to one customer or the company
can sale single product to many customers.

Note that there is no solid way of design cardinalities it can be customized us


needed.

Using the crow’s notation the symbol 1for zero is expressed as 0 for one 1 and
many expressed as

Note that there is usually minimum and maximum cardinality. For each entity
the minimum can be 1 and 0 the maximum can be as many as possible.

Note that the symbol for the cardinality 1 means that for every occurrence of
sales. There is one customer associated with sales.

The maximum cardinality for menu means that for every customer in the
database they can be many sales involved that is the company can make many
sales to one customers,

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