Deck 10: The Rea Approach to Business Process Modeling

Question 1

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

Answer 1

True

Question 2

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.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

In REA,resources are assets that include accounts receivable.

Question 5

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

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).

Question 8

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 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

At least two REA agents participate in each economic event.

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

The 'A' in REA stands for

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

Question 22

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

A)two events, one of them economic and 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 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

The 'R' in REA stands for

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

Question 25

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

Question 26

The 'E' in REA stands for

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

Question 27

Which of the following statements 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 28

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

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

Question 29

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 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

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 33

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

Question 34

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

Question 35

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 36

Which statement is not true? REA resources are:

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

Question 37

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 38

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 39

REA diagrams include all of the following entities except

A)support events
B)economic events
C)internal agents
D)users

Question 40

Value chain analysis distinguishes between primary activities and support activities.

Question 41

What is a user view?

Question 42

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

Question 43

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

Question 44

What are the two categories the REA model uses to describe events?

Question 45

Define cardinality.

Question 46

Define resources,economic events,and agents.

Question 47

What is a semantic data model?

Question 48

Define view integration?

Question 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

What are support events?

Question 54

Explain the relationship between cardinality and association.

Question 55

Define the value chain.

Question 56

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

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

Question 57

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 58

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 59

Define duality.

Question 60

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 61

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

Question 62

Explain how Take Order can be either an economic or a support event.

Question 63

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

Question 64

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

Question 65

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

Question 66

Define association.

Question 67

How does the REA approach improve efficiency?

Question 68

Describe the two economic events that occur for payroll procedures.

Question 69

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

Question 70

What are the four basic forms of cardinality?

Question 71

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

Question 72

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

Question 73

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

Question 74

Explain the difference between producing financial statements in a traditional system and in a REA model.

Question 75

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