Deck 10: The REA Approach to Business Process Modeling

Question 1

The REA model is an alternative accounting framework for modeling an organization's critical resources,events,and accounts.

Answer 1

False

Question 2

The REA approach generates an information system based on a single holistic user view.

Answer 2

False

Question 3

Four basic forms of cardinality are possible: zero or one (0,1),one and only one (1,1),one or many (1,M),and many and only many (M,M).

Answer 3

False

Question 4

When one side of a 1:1 association has a minimum cardinality of zero,the primary key of the table with the 0,1 cardinality should be embedded as a foreign key in the table with the 1,1 cardinality

Question 5

Modeling economic transactions under the REA approach always includes depicting both internal and external agents.

Question 6

When modeling M:M associations,it is conventional to include link tables in the REA diagram so that the model reflects closely the actual database.

Question 7

A difference between ER and REA diagrams is that ER diagrams present a static picture of the underlying business phenomena.

Question 8

An example of an economic event is checking customer credit prior to processing a sale.

Question 9

Modern managers need both financial and nonfinancial information that traditional GAAP-based accounting systems are incapable of providing.

Question 10

The events depicted on an REA diagram are transformed into computer processes while the resources and agents become relational database tables.

Question 11

Many believe that the accounting profession should shift away from financial statement reporting toward providing information that assists decision-making.

Question 12

In REA,resources are assets that include accounts receivable.

Question 13

Where a 1:M association exists between tables,the primary key of the 1 side is embedded in the table of the M side.

Question 14

According to the REA philosophy,information systems should support only the needs of accounting professionals.

Question 15

Most companies implementing an REA model also maintain a traditional general ledger system for financial reporting.

Question 16

ER diagrams always label entity names in the singular noun form.

Question 17

At least two REA agents participate in each an economic event.

Question 18

REA modeling embraces two classes of events: economic events and support events.

Question 19

The duality association in an REA diagrams signifies that each economic transaction involves two agents.

Question 20

Under the REA approach support events may directly affect a change in resources.

Question 21

Which of the following associations requires a separate link table?

A) 1:1
B) 1:M
C) M:M
D) none of the above

Question 22

Which of the following associations would most likely describe the relationship between an internal agent and an economic event?

A) 1:M
B) 1:1
C) 0:M
D) none of the above

Question 23

Which of the following tables would most likely have a composite key?

A) Take Order.
B) Cash
C) Ship Product
D) Inventory Ship Link

Question 24

Which of the following statement is correct?

A) The REA model requires that phenomena be characterized in a manner consistent with the development of a single user view.
B) The REA model requires that phenomena be characterized in a manner consistent with the development of a selected user view.
C) The REA model requires that phenomena be characterized in a manner consistent with the development of a unique user view.
D) The REA model requires that phenomena be characterized in a manner consistent with the development of a multiple user view.

Question 25

The concept of duality means that a REA diagram must consist of:

A) two events, one of them economic the other support
B) two agents, one of them internal and the other external
C) two resources, one increased and the other decreased by the same event
D) none of the above

Question 26

A semantic data model captures the operational meaning of the user's data and provides a concise description of it.

Question 27

The 'E' in REA stands for

A) events
B) estimates
C) economics
D) entities

Question 28

In a REA diagram each economic event is always

A) linked to at least two resource entities
B) linked to two external agents
C) linked to another economic event
D) linked to two internal agents

Question 29

Value chain analysis distinguishes between primary activities and support activities.

Question 30

Which of the following are characteristics of internal agents?

A) They participate in economic events, but do not assume control of the resources
B) They are employees of the company whose system is being modeled
C) They participate in economic events, but not in support events
D) All of the above

Question 31

REA resources are those things of economic value under the control of the enterprise including physical assets and employees.

Question 32

The 'R' in REA stands for

A) ratios
B) relationships
C) resources
D) reserves

Question 33

The 'A' in REA stands for

A) assets
B) apportionment
C) allocation
D) agents

Question 34

Which of the following events would be least likely to be modeled in a REA diagram?

A) customer inquires
B) posting accounts payable
C) receiving cash
D) sales to a customer

Question 35

All of the following are examples of economic events except

A) receiving raw materials from a supplier
B) checking a customer's credit prior to processing a sales order
C) disbursing cash for inventories received
D) shipping product to a customer

Question 36

The letters 'R,' 'E,' and 'A' in the term "REA model" stand for resources,events,and actions?

Question 37

Which of the following is true?

A) REA diagram entities are arranged in constellations by entity class.
B) ER diagrams present a static picture of the underlying business phenomena
C) Events entity names in REA diagrams are in the verb form
D) All of the above are true statements

Question 38

Support events include control,planning,and management activities that directly affect a change in resources.

Question 39

Which types of entities are included in REA diagrams?

A) support events
B) economic events
C) internal agents
D) all of the above

Question 40

Which statement is NOT true? REA resources are:

A) assets
B) affected by support events
C) scarce
D) under the control of agents

Question 41

When assigning foreign keys in a 1:1 association:

A) The primary key of each table should be embedded as a foreign key in the related table
B) The primary key on the (0,1) side of the relation should be embedded as the foreign key on the (1,1) side.
C) The primary key on the (1,1) side of the relation should be embedded as the foreign key on the (0,1) side.
D) None of the above is true

Question 42

In an REA model,events are described from the perspective of

A) the organization
B) the designer
C) the user
D) the customer

Question 43

Explain the rule for assigning foreign keys in a (1:M)association?

Question 44

What is a semantic data model?

Question 45

Define resources,economic events,and agents.

Question 46

Explain the relationship between cardinality and association.

Question 47

What is a user view?

Question 48

When assigning foreign keys in a 1:M association

A) The primary key of each table should be embedded as a foreign key in the related table
B) The primary key on the (0,M) side of the relation should be embedded as the foreign key on the (1,1) side.
C) The primary key on the (1,1) side of the relation should be embedded as the foreign key on the (0,M) side.
D) None of the above is true

Question 49

Why would a company adopt the REA approach to database design?

Question 50

Describe the rule for assigning foreign keys in a (1:1)association

Question 51

Define the value chain

Question 52

Explain how events,resources and agents are linked in a REA diagram.

Question 53

How does the REA model categorize events?

Question 54

What are the minimum number and type of event entities that an REA diagram must include?

Question 55

What are support events?

Question 56

Which of the following is NOT an example of an economic event?

A) Ship goods
B) Receive goods
C) Get employee time
D) Prepare cash disbursements voucher

Question 57

Define view integration?

Question 58

Define duality.

Question 59

When developing an REA model:

A) Accounting artifacts are represented as support events
B) The same resource is both increased and decreased by the duality association
C) Link tables are explicitly depicted
D) events are organized in sequence of occurrence

Question 60

What do the letters 'R,' 'E,' and 'A' stand for in the term "REA model"?

Question 61

How do the entity relationship (ER)and the REA diagrams differ?

Question 62

Define cardinality.

Question 63

Explain how a Disbursement Voucher table can be used to replace traditional accounting records.

Question 64

Since REA databases do not employ journals and ledgers,how can they support financial statement reporting?

Question 65

Discuss how adopting a value chain perspective reveals advantages of adopting an REA approach to information system development.

Question 66

How are tables in a (M:M)association physically linked?

Question 67

Explain how a sales invoice table can be used to replace traditional accounting records.

Question 68

Why are journals and ledgers not modeled in an REA diagram?

Question 69

Discuss the concept of duality as it relates modeling an economic transaction.

Question 70

What is the REA model? What does it mean for accountants?

Question 71

Discuss the limitations of transaction based systems

Question 72

Define association.

Question 73

How does the REA approach improve efficiency?

Question 74

List and explain the steps involved in preparing an REA model of a business process.

Question 75

Discuss why adherence by the accounting profession to a single,GAAP-based view is inappropriate.

Question 76

What are the four basic forms of cardinality?