Deck 10: The Rea Approach to Business Process Modeling

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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

Question 5

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 6

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

Question 7

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

Question 8

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

Question 9

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 10

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 11

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

Question 12

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 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

In REA,resources are assets that include accounts receivable.

Question 19

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

Question 20

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

Question 21

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 22

The 'E' in REA stands for

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

Question 23

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 24

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 25

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

Question 26

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 27

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 28

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 29

Value chain analysis distinguishes between primary activities and support activities.

Question 30

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

Question 31

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 32

Which types of entities are included in REA diagrams?

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

Question 33

The 'R' in REA stands for

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

Question 34

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 35

The 'A' in REA stands for

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

Question 36

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

Question 37

Which statement is NOT true? REA resources are:

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

Question 38

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 39

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

Question 40

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 41

How does the REA model categorize events?

Question 42

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 43

Define resources,economic events,and agents.

Question 44

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

Question 45

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

Question 46

What are support events?

Question 47

What is a user view?

Question 48

Explain the relationship between cardinality and association.

Question 49

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 50

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

Question 51

Define the value chain

Question 52

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 53

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

Question 54

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

Question 55

What is a semantic data model?

Question 56

Define duality.

Question 57

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 58

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

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

Question 59

Define view integration?

Question 60

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

Question 61

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

Question 62

Define cardinality.

Question 63

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

Question 64

Discuss the limitations of transaction based systems

Question 65

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

Question 66

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

Question 67

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

Question 68

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

Question 69

How does the REA approach improve efficiency?

Question 70

Define association.

Question 71

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

Question 72

What are the four basic forms of cardinality?

Question 73

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

Question 74

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

Question 75

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