Deck 10: The Rea Approach to Business Process Modeling

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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 5

In REA, resources are assets that include accounts receivable.

Question 6

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 7

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

Question 8

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

Question 9

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 10

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

Question 11

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 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

Value chain analysis distinguishes between primary activities and support activities.

Question 22

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 23

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 24

Which types of entities are included in REA diagrams?

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

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

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 27

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 28

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 29

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 30

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 31

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

Question 32

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

Question 33

The 'A' in REA stands for

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

Question 34

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

Question 35

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

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

The 'R' in REA stands for

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

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

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 40

The 'E' in REA stands for

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

Question 41

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

Question 42

What is a semantic data model?

Question 43

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

Question 44

Define duality.

Question 45

How does the REA model categorize events?

Question 46

Explain the relationship between cardinality and association.

Question 47

What are support events?

Question 48

Define view integration?

Question 49

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

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

Question 50

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

Question 51

Define the value chain

Question 52

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 53

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 54

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

Question 55

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

Question 56

What is a user view?

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

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

Question 59

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 60

Define resources, economic events, and agents.

Question 61

What are the four basic forms of cardinality?

Question 62

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

Question 63

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

Question 64

Describe the two economic events that occur for payroll procedures.

Question 65

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

Question 66

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

Question 67

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

Question 68

Define cardinality.

Question 69

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

Question 70

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

Question 71

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

Question 72

Define association.

Question 73

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

Question 74

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

Question 75

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

Question 76

How does the REA approach improve efficiency?