8/11/2019 Romney Ch15
1/138
8/11/2019 Romney Ch15
2/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 2 of 138
INTRODUCTION
Questions to be addressed in this chapterinclude: What steps are followed to design and
implement a database system?
How is the REA data model used to design anAIS database?
How is an entity-relationship REA diagram ofan AIS database drawn?
How are REA diagrams read, and what dothey reveal about the business activities andpolicies of the organization being modeled?
8/11/2019 Romney Ch15
3/138
8/11/2019 Romney Ch15
4/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 4 of 138
INTRODUCTION
Steps in database design include thefollowing: Planning
Requirements analysis Identifying user information needs.
Defining scope of proposed system.
Using information about the expected number of
users and transaction volume to make preliminary
decisions on hardware and software
requirements.
8/11/2019 Romney Ch15
5/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 5 of 138
INTRODUCTION
Steps in database design include thefollowing: Planning
Requirements analysis Design Developing different schemas for the new
system at the conceptual, external, and internal
levels.
8/11/2019 Romney Ch15
6/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 6 of 138
INTRODUCTION
Steps in database design include thefollowing: Planning
Requirements analysis Design
Coding
Translating the internal-level schema into the
actual database structures that will beimplemented in the new system.
Developing new applications.
8/11/2019 Romney Ch15
7/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 7 of 138
INTRODUCTION
Steps in database design include thefollowing: Planning
Requirements analysis Design
Coding
Implementation
Transferring data from existing systems to thenew database.
Testing the new system.
Training employees.
8/11/2019 Romney Ch15
8/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 8 of 138
INTRODUCTION
Steps in database design include thefollowing: Planning
Requirements analysis Design
Coding
Implementation
Operation and maintenance Using and maintaining the new system.
Monitoring system performance and user
satisfaction to determine need for enhancements
and modifications.
8/11/2019 Romney Ch15
9/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 9 of 138
INTRODUCTION
Steps in database design include thefollowing: Planning
Requirements analysis
Design
Coding
Implementation
Operation and maintenance
Eventually, changes in business strategyand practices or new IT developmentslead to the need for a new system and theprocess starts over.
8/11/2019 Romney Ch15
10/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 10 of 138
INTRODUCTION
Accountants can and should participate in all
stages of the database design process, although
participation varies between stages.
Planning stage
Accountants provide information to help
evaluate feasibility.
Participate in the feasibility decision.
8/11/2019 Romney Ch15
11/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 11 of 138
INTRODUCTION
Accountants can and should participate in all
stages of the database design process, although
participation varies between stages.
Planning stage Requirements analysis and design stages
Accountants participate in:
Identifying user needs
Developing logical schemas Designing data dictionary
Specifying controls
8/11/2019 Romney Ch15
12/138
8/11/2019 Romney Ch15
13/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 13 of 138
INTRODUCTION
Accountants can and should participate in all
stages of the database design process, although
participation varies between stages.
Planning stage Requirements analysis and design stages
Coding stage
Implementation stage
Accountants help test accuracy of database and
application programs.
8/11/2019 Romney Ch15
14/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 14 of 138
INTRODUCTION
Accountants can and should participate in all
stages of the database design process, although
participation varies between stages.
Planning stage Requirements analysis and design stages
Coding stage
Implementation stage
Operation and maintenance stage
Accountants use the database system to
process transactions.
Sometimes help manage it.
8/11/2019 Romney Ch15
15/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 15 of 138
INTRODUCTION
Accountants may provide the greatest value by
taking responsibility for datamodel ingthe
process of defining a database to faithfully
represent all aspects of the organization,including interactions with the external
environment.
Occurs during both requirements analysis and design
stage. Two important tools to facilitate data modeling:
Entity-relationship diagramming
REA data model
8/11/2019 Romney Ch15
16/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 16 of 138
INTRODUCTION
Accountants may provide the greatest value by
taking responsibility for datamodel ingthe
process of defining a database to faithfully
represent all aspects of the organization,including interactions with the external
environment.
Occurs during both requirements analysis and design
stage. Two important tools to facilitate data modeling:
Entity-relationship diagramming
REA data model
8/11/2019 Romney Ch15
17/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 17 of 138
ENTITY-RELATIONSHIP DIAGRAMS
An enti ty -relat ionsh ip (E-R)
diagramis a graphical technique for
portraying a database schema. Shows the various entities being
modeled and the important relationships
among them.
8/11/2019 Romney Ch15
18/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 18 of 138
ENTITY-RELATIONSHIP DIAGRAMS
An enti tyis anything about which theorganization wants to collect and storeinformation. Example: Your university collects and stores
information about students, courses, enrollmentactivity, etc.
In a relational database, separate tables wouldbe created to store information about each
distinct entity. In an object-oriented database, separate classes
would be created for each distinct entity.
8/11/2019 Romney Ch15
19/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 19 of 138
ENTITY-RELATIONSHIP DIAGRAMS
Enrollment Students
In an E-R diagram, entities are depicted as rectangles.
But there are no industry standards for other aspects of
these diagrams.
8/11/2019 Romney Ch15
20/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 20 of 138
ENTITY-RELATIONSHIP DIAGRAMS
Some data modelers, tools, and authors
use diamonds to depict relationships.
Enrollment StudentsLine
Items
8/11/2019 Romney Ch15
21/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 21 of 138
ENTITY-RELATIONSHIP DIAGRAMS
Others do not use diamonds.
Enrollment Students
8/11/2019 Romney Ch15
22/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 22 of 138
ENTITY-RELATIONSHIP DIAGRAMS
Sometimes the attributes associated with each entity aredepicted as named ovals connected to each rectangle.
Enrollment Students
Enrollment
Number Enrollment
Date
Enrollment
Time
Student
ID No.
Student
Name
Student
Address
8/11/2019 Romney Ch15
23/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 23 of 138
ENTITY-RELATIONSHIP DIAGRAMS
Sometimes these attributes are listed in a separate table.
Enrollment Students
Entity Name Attributes
Enrollment Enrollment No., Enrollment Date, Enrollment Time
Student Student ID No., Student Name, Student Address
8/11/2019 Romney Ch15
24/138 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 24 of 138
ENTITY-RELATIONSHIP DIAGRAMS
In this book, we will create E-R diagrams with a largenumber of entities and relationships.
To reduce clutter and improve readability, we omitdiamonds and list attributes in a separate table.
Enrollment Students
Entity Name Attributes
Enrollment Enrollment No., Enrollment Date, Enrollment Time
Student Student ID No., Student Name, Student Address
8/11/2019 Romney Ch15
25/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 25 of 138
ENTITY-RELATIONSHIP DIAGRAMS
E-R diagrams can be used to represent
the contents of any kind of databases.
Our focus is on databases designed to
support an organizations business
activities.
The diagrams we develop depict the
contents of a database and graphically
model those business processes.
8/11/2019 Romney Ch15
26/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 26 of 138
ENTITY-RELATIONSHIP DIAGRAMS
In addition to their use in designing
databases, E-R diagrams can be used to:
Document and understand existing
databases.
Reengineer business processes.
In this chapter, well use E-R diagrams for
designing new databases andunderstanding existing ones.
8/11/2019 Romney Ch15
27/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 27 of 138
ENTITY-RELATIONSHIP DIAGRAMS
E-R diagrams can include many different
kinds of entities and relationships.
An important step in designing a database
is deciding which entities need to be
modeled.
The REA data model is useful for this
decision.
8/11/2019 Romney Ch15
28/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 28 of 138
INTRODUCTION
Accountants may provide the greatest value by
taking responsibility for datamodel ingthe
process of defining a database to faithfully
represent all aspects of the organization,including interactions with the external
environment.
Occurs during both requirements analysis and design
stage. Two important tools to facilitate data modeling:
Entity-relationship diagramming
REA data model
8/11/2019 Romney Ch15
29/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 29 of 138
THE REA DATA MODEL
The REA data model was developed specificallyfor use in designing accounting informationsystems. Focuses on business semantics underlying an
organizations value chain activities. Provides guidance for: Identifying the entities to be included in a database.
Structuring the relationships among the entities.
REA data models are usually depicted in the
form of E-R diagrams. Therefore, we refer to E-R diagrams developed
with the REA model as REA d iagrams.
8/11/2019 Romney Ch15
30/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 30 of 138
THE REA DATA MODEL
Three basic types of entities
The REA data model is so named because it
classifies entities into three distinct
categories: Resourcesthat the organization acquires and
uses. Resources are things that have
economic value to the organization.
8/11/2019 Romney Ch15
31/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 31 of 138
THE REA DATA MODEL
Three basic types of entities
The REA data model is so named because it
classifies entities into three distinct
categories: Resourcesthat the organization acquires and
uses.
Eventsin which the organization engages.
These are the various business activities
about which management wants to
collect information for planning or
control purposes.
8/11/2019 Romney Ch15
32/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 32 of 138
THE REA DATA MODEL
Three basic types of entities
The REA data model is so named because it
classifies entities into three distinct
categories: Resourcesthat the organization acquires and
uses.
Eventsin which the organization engages
Agentsparticipating in these events.
Includes people and organizations who
participate in events and about whom
information is desired for planning,
control, and evaluation purposes.
8/11/2019 Romney Ch15
33/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 33 of 138
THE REA DATA MODEL
Can you identify the resourcesin this diagram?
Employee
Customer
Employee
Sales
Receive
Cash
Inventory
Cash
Accounts
8/11/2019 Romney Ch15
34/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 34 of 138
THE REA DATA MODEL
Can you identify the resources in this diagram?
Employee
Customer
Employee
Sales
Receive
Cash
Inventory
Cash
Accounts
8/11/2019 Romney Ch15
35/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 35 of 138
THE REA DATA MODEL
Can you identify the eventsin this diagram?
Employee
Customer
Employee
Sales
Receive
Cash
Inventory
Cash
Accounts
8/11/2019 Romney Ch15
36/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 36 of 138
THE REA DATA MODEL
Can you identify the events in this diagram?
Employee
Customer
Employee
Sales
Receive
Cash
Inventory
Cash
Accounts
8/11/2019 Romney Ch15
37/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 37 of 138
THE REA DATA MODEL
Can you identify the agentsin this diagram?
Employee
Customer
Employee
Sales
Receive
Cash
Inventory
Cash
Accounts
8/11/2019 Romney Ch15
38/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 38 of 138
THE REA DATA MODEL
Can you identify the agents in this diagram?
Employee
Customer
Employee
Sales
Receive
Cash
Inventory
Cash
Accounts
8/11/2019 Romney Ch15
39/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 39 of 138
THE REA DATA MODEL
Structuring relationships: The basic
REA template
The REA data model prescribes a basic
pattern for how the three types of entities(resources, events, and agents) should relate
to one another.
Rule 1: Each event is linked to at least one
resource that it affects.
8/11/2019 Romney Ch15
40/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 40 of 138
THE REA DATA MODEL
Event A
Event B
Resource A
Resource B
8/11/2019 Romney Ch15
41/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 41 of 138
THE REA DATA MODEL
Structuring relationships: The basic
REA template
The REA data model prescribes a basic
pattern for how the three types of entities(resources, events, and agents) should relate
to one another.
Rule 1: Each event is linked to at least one
resource that it affects.
Rule 2: Each event is linked to at least one
other event.
8/11/2019 Romney Ch15
42/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 42 of 138
THE REA DATA MODEL
Event A
Event B
Resource A
Resource B
8/11/2019 Romney Ch15
43/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 43 of 138
THE REA DATA MODEL
Structuring relationships: The basic
REA template
The REA data model prescribes a basic
pattern for how the three types of entities(resources, events, and agents) should relate
to one another.
Rule 1: Each event is linked to at least one resource
that it affects.
Rule 2: Each event is linked to at least one other event.
Rule 3: Each event is linked to at least two agents.
8/11/2019 Romney Ch15
44/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 44 of 138
THE REA DATA MODEL
Agent A
Agent B
Agent C
Event A
Event B
Resource A
Resource B
8/11/2019 Romney Ch15
45/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 45 of 138
THE REA DATA MODEL
Lets take a closer look at each ofthese three rules.
8/11/2019 Romney Ch15
46/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 46 of 138
THE REA DATA MODEL
Rule 1: Every event entity must be linked toat least one resource entity. Events must be linked to at least one resource that
they affect.
Some events affect the quantity of a resource: If they increase the quantity of a resource, they are called a
get event.
If they decrease the quantity of a resource they are called agive event.
Example: If you purchase inventory for cash:
The get event is that you receive inventory.
The give event is that you pay cash.
Relationships that affect the quantity of a resource aresometimes referred to as stockf lowrelationships.
8/11/2019 Romney Ch15
47/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 47 of 138
THE REA DATA MODEL
Not every event directly alters the quantity of a
resource.
If a customer orders goods but has not paid and
has not received goods, this activity is called a
commi tmentevent. Organizations track the effects of commitments to
provide better service and for planning purposes.
8/11/2019 Romney Ch15
48/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 48 of 138
THE REA DATA MODEL
Rule 2: Every event entity must be linked to
at least one other event entity.
Give and get events are linked together in what is
labeled an econom ic dual i tyrelationship.
These relationships reflect the basic business
principle that organizations engage in activities that
use up resources in hopes of acquiring other
resources in exchange.
Each accounting cycle can be described in terms of
give-to-get economic duality relationships.
8/11/2019 Romney Ch15
49/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 49 of 138
The revenue cycle involves interactions
with your customers.
You sell goods or services and get cash.
THE REA DATA MODEL
Give
InventoryGet
Cash
8/11/2019 Romney Ch15
50/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 50 of 138
The expenditure cycle involves
interactions with your suppliers.
You buy goods or services and pay cash.
THE REA DATA MODEL
Give
CashGet
Inventory
8/11/2019 Romney Ch15
51/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 51 of 138
In the production cycle, raw materials, labor, andmachinery and equipment time are transformedinto finished goods.
THE REA DATA MODEL
Give (Use)Raw
Materials
Give (Use)
Employee
Time
Give (Use)
Machinery &
Equipment
Get Finished
Goods
Inventory
8/11/2019 Romney Ch15
52/138
8/11/2019 Romney Ch15
53/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 53 of 138
The financing cycle involves interactions withinvestors and creditors.
You raise capital (through stock or debt), repaythe capital, and pay a return on it (interest ordividends).
THE REA DATA MODEL
Give
CashGet
Cash
8/11/2019 Romney Ch15
54/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 54 of 138
THE REA DATA MODEL
Not every relationship between two events
represents a give-to-get economic duality.
Commitment events are linked to other events
to reflect sequential cause-effectrelationships.
Example:
Take customer order (commitment), which leadsto:
Deliver inventory (give event) and receive cash
(get event).
8/11/2019 Romney Ch15
55/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 55 of 138
THE REA DATA MODEL
Rule 3: Every event entity must belinked to at least two participatingagents.
For accountability, organizations need to beable to track actions of employees.
Also need to monitor the status ofcommitments and exchanges with outside
parties. Each event links to at least two participating
agents.
8/11/2019 Romney Ch15
56/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 56 of 138
THE REA DATA MODEL
For events that involve transactions with externalparties: The internal agent is the employee responsible for the
affected resource.
The external agent is the outside party to thetransaction.
For internal events, such as transferring rawmaterials to the production floor:
The internal agent is the employee who gives upresponsibility or custody for the resource.
The external agent is the one who receives it.
8/11/2019 Romney Ch15
57/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 57 of 138
DEVELOPING AN REA DIAGRAM
To design an REA diagram for an entire
AIS, one would develop a model for each
transaction cycle and then integrate the
separate diagrams into an enterprise-widemodel.
In this chapter, we focus on the individual
transaction cycles.
8/11/2019 Romney Ch15
58/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 58 of 138
DEVELOPING AN REA DIAGRAM
Developing an REA diagram for a specific
transaction cycle consists of three steps:
STEP ONE: Identify the events about which
management wants to collect information. STEP TWO: Identify the resources affected by
the events and the agents who participated.
STEP THREE: Determine the cardinalitiesbetween the relationships.
Lets walk through an example.
8/11/2019 Romney Ch15
59/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 59 of 138
DEVELOPING AN REA DIAGRAM
Developing an REA diagram for a specific
transaction cycle consists of three steps:
STEP ONE: Identify the events about which
management wants to collect information. STEP TWO: Identify the resources affected by
the events and the agents who participated.
STEP THREE: Determine the cardinalities
between the relationships.
Lets walk through an example.
STEP ONE IDENTIFY RELEVANT
8/11/2019 Romney Ch15
60/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 60 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
At a minimum, every REA model must includethe two events that represent the basic give-to-get economic exchange performed in thattransaction cycle.
The give event reduces one of the organizationsresources.
The get event increases a resource.
There are usually other events that managementis interested in planning, controlling, andmonitoring. These should be included in themodel.
STEP ONE IDENTIFY RELEVANT
8/11/2019 Romney Ch15
61/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 61 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
STEP ONE IDENTIFY RELEVANT
8/11/2019 Romney Ch15
62/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 62 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
Taking the customer
order does not involve
giving or taking a
resource. It is a
commitment event.
STEP ONE IDENTIFY RELEVANT
8/11/2019 Romney Ch15
63/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 63 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
Filling the order involves
a reduction in thecompanys inventory. It
is a give event.
STEP ONE IDENTIFY RELEVANT
8/11/2019 Romney Ch15
64/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 64 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
Billing customers
involves the exchange of
information with an
external party but does
not affect resources.
STEP ONE IDENTIFY RELEVANT
8/11/2019 Romney Ch15
65/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 65 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment Collecting payment
results in an increase in
cash. It is a get event.
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
66/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 66 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
The give-to-get, then, is: Fill customer order
(often referred to as
sale);
Collect cash (often
referred to as cashreceipt).
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
67/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 67 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
Should take customer
order and bill
customer be included in
the model?
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
68/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 68 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
Taking an order requires
that we set resources
aside.
That information should
be included in our
model.
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
69/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 69 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Example: Typical activities in the revenue
cycle include:
Take customer order
Fill customer order
Bill customer
Collect payment
Printing and mailing
invoices does not directly
affect an economic
resource.
It does not represent acommitment on the part of
the company to a future
exchange.
It is an information
retrieval event and shouldnot alter the contents of
the database.
Does not need to be
included in the model.
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
70/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 70 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Although accounts receivable is an assetin financial reporting, it is not representedas a resource in an REA model.
It represents the difference between totalsales to a customer and total cash collectionsfrom the customer.
The information to calculate an accounts
receivable balance is already there becausethe sales and cash receipt information iscaptured.
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
71/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 71 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Events that pertain to entering data or
re-packaging data in some way do not
appear on the REA model.
They are not primarily value-chain activities.
What is modeled is the business event and
the facts management wants to collect about
the event, not the data entry process.
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
72/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 72 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
In completing the first step of an REA
diagram, the event entities are typically
drawn from top to bottom in the sequence
in which they normally occur.
STEP ONE: IDENTIFY RELEVANT
8/11/2019 Romney Ch15
73/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 73 of 138
STEP ONE: IDENTIFY RELEVANT
EVENTS
Sale
Receive
Cash
Take Order
8/11/2019 Romney Ch15
74/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 74 of 138
DEVELOPING AN REA DIAGRAM
Developing an REA diagram for a specifictransaction cycle consists of three steps:
STEP ONE: Identify the events about which
management wants to collect information. STEP TWO: Identify the resources affectedby the events and the agents whoparticipated.
STEP THREE: Determine the cardinalitiesbetween the relationships.
Lets walk through an example.
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
75/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 75 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
When the relevant events have been
diagrammed in the center of the REA
diagram, the resources that are affected
by those events need to be identified. Involves determining:
The resource(s) reduced by the give event.
The resource(s) increased by the get event. The resources that are affected by a
commitment event.
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
76/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 76 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What is the give
event?
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
77/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 77 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What is the give
event?
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
78/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 78 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What resource
is reduced by
the give event?
Inventory
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
79/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 79 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What is the get
event?Inventory
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
80/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 80 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What is the get
event?Inventory
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
81/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 81 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What resource
is increased bythe get event?
Inventory
Cash
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
82/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 82 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
Is there a
commitmentevent?
Inventory
Cash
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
83/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 83 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
Is there a
commitmentevent?
Inventory
Cash
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
84/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 84 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What resource
is affected bythe commitment
event?
Inventory
Cash
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
85/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 85 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
The agents who participate in each eventshould also be identified.
There will always be at least one internal
agent (employee). In most cases, there will also be an external
agent (e.g., customer or supplier) who
participates.
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
86/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 86 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What agents are
involved in the
sale?
Inventory
Cash
Customer
Employee
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
87/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 87 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What agents are
involved in the
receipt of cash?
Inventory
Cash
Customer
Employee
Customer
STEP TWO: IDENTIFY RESOURCES AND
8/11/2019 Romney Ch15
88/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 88 of 138
STEP TWO: IDENTIFY RESOURCES AND
AGENTS
Sale
Receive
Cash
Take Order
What agents are
involved in
taking theorder?
Inventory
Cash
Customer
Employee
Customer
Employee
DEVELOPING AN REA DIAGRAM
8/11/2019 Romney Ch15
89/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 89 of 138
DEVELOPING AN REA DIAGRAM
Developing an REA diagram for a specifictransaction cycle consists of three steps:
STEP ONE: Identify the events about which
management wants to collect information. STEP TWO: Identify the resources affected by
the events and the agents who participated.
STEP THREE: Determine the cardinalitiesbetween the relationships.
Lets walk through an example.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
90/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 90 of 138
S
CARDINALITIES OF RELATIONSHIPS
The final step in an REA diagram for atransaction cycle is to add information about the
relationship cardinalities.
A cardinal i tydescribes the nature of therelationship between two entities.
It indicates how many instances of one entity can be
linked to a specific instance of another entity.
For example, the cardinality between the event Salesand the agent Customeranswers the question:
For each sale a company makes, how many customers are
associated with that sale?
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
91/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 91 of 138
CARDINALITIES OF RELATIONSHIPS
Unfortunately, there is no universalstandard for diagramming cardinalities.
In this text, we adopt the graphical crows
feet notation style because: It is becoming increasingly popular.
It is used by many software design tools.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
92/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 92 of 138
CARDINALITIES OF RELATIONSHIPS
Using the crows feet notation:
The symbol for zerois a circle:O
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
93/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 93 of 138
CARDINALITIES OF RELATIONSHIPS
Using the crows feet notation: The symbol for zero is a circle: O
The symbol for oneis a single stroke:|
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
94/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 94 of 138
CARDINALITIES OF RELATIONSHIPS
Using the crows feet notation: The symbol for zero is a circle: O
The symbol for one is a single stroke: |
The symbol for manyis the crows foot:
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
95/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 95 of 138
CARDINALITIES OF RELATIONSHIPS
Sale Customer
There is typically a minimum and
maximum cardinality for each entity
participating in a relationship.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
96/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 96 of 138
CARDINALITIES OF RELATIONSHIPS
Sale Customer
The minimum cardinality can be
either zero or one.
The symbols for the minimumcardinalities are shown above in
red.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
97/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 97 of 138
CARDINALITIES OF RELATIONSHIPS
Sale Customer
The minimum cardinality symbol
next to customer is the symbol for
one. This symbol means that for every
occurrence of a sale, there must be
a minimum of one customer
involved.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
98/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 98 of 138
CARDINALITIES OF RELATIONSHIPS
Sale Customer
The minimum cardinality symbol next to sale is the
symbol for zero.
This symbol means that for every customer in thedatabase, there must be a minimum of zero sales. This
minimum of zero allows the company to add a customer
to its database before any sales have been made to that
customer, i.e., a prospective customer can be included.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
99/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 99 of 138
CARDINALITIES OF RELATIONSHIPS
Sale Customer
The maximum cardinality can be
either one or N (many).
The symbols for the maximumcardinalities are shown above in
red.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
100/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 100 of 138
CARDINALITIES OF RELATIONSHIPS
SaleCustomer
The maximum cardinality symbol
next to customer is the symbol for
one. This symbol means that for every
occurrence of a sale, there can be
no more than one customer
involved.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
101/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 101 of 138
CARDINALITIES OF RELATIONSHIPS
SaleCustomer
The maximum cardinality symbol next to sale is the
symbol for many.
This symbol means that for every customer in thedatabase, there can be many sales involved. Obviously,
a company can make multiple sales to an individual
customer.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
102/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 102 of 138
CARDINALITIES OF RELATIONSHIPS
Three types of relationships Three types of relationships are possible between
entities.
Relationships depend on the maximum cardinality on
each side of a relationship. A one-to-one relationship (1:1) exists when the maximum
cardinality for each entity in the relationship is one.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
103/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 103 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Take Order
Both maximums
are one, so this is
a one-to-onerelationship.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
104/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 104 of 138
CARDINALITIES OF RELATIONSHIPS
Three types of relationships Three types of relationships are possible between
entities.
Relationships depend on the maximum cardinality on
each side of a relationship. A one-to-one relationship (1:1) exists when the maximum
cardinality for each entity in the relationship is one.
A one-to-many (1:N) relationship exists when the
maximum cardinality on one side is one and the
maximum on the other side is many.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
105/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 105 of 138
CARDINALITIES OF RELATIONSHIPS
SaleCustomer
The maximum number of customers that can be
involved in each sale is one.
The maximum number of sales that can be associatedwith any individual customer is many.
This is a one-to-many (1:N) relationship.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
106/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 106 of 138
CARDINALITIES OF RELATIONSHIPS
Three types of relationships Three types of relationships are possible between
entities.
Relationships depend on the maximum cardinality on
each side of a relationship. A one-to-one relationship (1:1) exists when the maximum
cardinality for each entity in the relationship is one.
A one-to-many (1:N) relationship exists when the maximum
cardinality on one side is one and the maximum on the other
side is many.
A many-to-many (M:N) relationship exists when the
maximum on both sides is many.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
107/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 107 of 138
CARDINALITIES OF RELATIONSHIPS
Inventory Sale
The maximum number of inventory items that can be
sold in one sale is many.
The maximum number of sales that can occur for aparticular inventory item is many.
This is a many-to-many (M:N) relationship.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
108/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 108 of 138
CARDINALITIES OF RELATIONSHIPS
It is not a one size fits all world forrelationships and cardinalities. The
cardinalities between two entities can vary
based on how the particular companydoes business.
Lets look at some examples.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
109/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 109 of 138
CARDINALITIES OF RELATIONSHIPS
Cash
Receipt
Sale Customers pay
for each sale with
a maximum of
one payment
(typical for retail
stores).
Each cash receipt
from a customer
relates to one
(and only one)
sale.
The relationship
between sales
and cash receipts
is 1:1.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
110/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 110 of 138
CARDINALITIES OF RELATIONSHIPS
Cash
Receipt
Sale Customers pay
for each sale with
a maximum of
many payments
(installments).
Each cash receiptfrom a customer
relates to one
(and only one)
sale.
The relationshipbetween sales
and cash receipts
is 1:N.
STEP THREE: DETERMINE
8/11/2019 Romney Ch15
111/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 111 of 138
CARDINALITIES OF RELATIONSHIPS
Cash
Receipt
Sale Customers make
only one payment
for a sale.
Each cash receipt
from a customer
can relate tomultiple sales
(e.g., they pay for
all sales that
month in one
payment).
The relationship
between sales
and cash receipts
is 1:N.
STEP THREE: DETERMINE
C S O O S S
8/11/2019 Romney Ch15
112/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 112 of 138
CARDINALITIES OF RELATIONSHIPS
Cash
Receipt
Sale Customers may
make multiple
payments for a
particular sale.
A cash receipt
from a customermay relate to
more than one
sale.
The relationship
between salesand cash receipts
is M:N.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
113/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 113 of 138
CARDINALITIES OF RELATIONSHIPS
In other words, the choice of cardinalitiesis not arbitrary.
It reflects facts about the organization that
are obtained during the requirementsdefinition stage of the database design
process.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
114/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 114 of 138
CARDINALITIES OF RELATIONSHIPS
Now lets go back to the REA diagram forthe revenue cycle and see if we can
complete the cardinalities.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
115/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 115 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
116/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 116 of 138
CARDINALITIES OF RELATIONSHIPS
In relationships between events andagents:
For each event that occurs, the cardinality
between event and agent is typically (1:1). Example: When a sale occurs:
There is usually one and only one customer.
There is usually one and only one salesperson.
This practice makes it more feasible for theorganization to establish employee accountability
for the event.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
Can you think of a
8/11/2019 Romney Ch15
117/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 117 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
scenario in which the
cardinality between
event and agent mightnot be (1:1)?
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
How many employees
8/11/2019 Romney Ch15
118/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 118 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
would be involved in a
take order event if
the customer placedthe order online?
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
119/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 119 of 138
CARDINALITIES OF RELATIONSHIPS
For each agent the cardinality between agentand event is typically (0:N).
Example: For a particular salesperson:
There is typically a minimum of zero sales (allows for
inclusion of a new salesperson who has not yet made anysales).
A salesperson can have a maximum of many sales.
Or: For a particular customer:
There is typically a minimum of zero sales (to allow for theinclusion of prospective customers who havent bought
anything yet) and a maximum of many sales.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
120/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 120 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
121/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 121 of 138
CARDINALITIES OF RELATIONSHIPS
Lets now look at the relationship betweenevents and resources.
In the cardinality between event and resource,
the minimum cardinality is typically one,because an event cant occur without
affecting at least one resource.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
122/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 122 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
123/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 123 of 138
CARDINALITIES OF RELATIONSHIPS
The maximum could be one or zero. In this particular story, each sale can involve
many items of inventory, so the maximum is
many. However, every receipt of cash is deposited to
one and only one cash account, so the
maximum there is one.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
124/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 124 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
125/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 125 of 138
CARDINALITIES OF RELATIONSHIPS
In the cardinality between event andresource, the minimum is typically zero.
A company can have an inventory item for
which there has never been a sale. When the companys cash account is new,
there has never been a cash receipt
deposited in it.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
126/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 126 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
127/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 127 of 138
CARDINALITIES OF RELATIONSHIPS
In the cardinality between event andresource, the maximum is typically many.
Most inventory items can be sold many times.
(An exception might occur if each inventoryitem is one unique item, such as a piece of
real estate.)
The companys cash account can have many
cash receipts.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
128/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 128 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
129/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 129 of 138
CARDINALITIES OF RELATIONSHIPS
Finally, lets look at the relationships between events. When events occur in a sequence, the minimum
cardinality between the first event and the second eventis always zero, because there is a span of time (althoughpossibly quite short) when the first event has occurred
but there are zero occurrences of the second event. Examples:
When an order is first taken, there have been no deliveries ofgoods (sale event) to the customer.
When goods are delivered to the customer, there is a span oftime, however brief, in which there is no cash receipt from thecustomer.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
130/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 130 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
131/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 131 of 138
CARDINALITIES OF RELATIONSHIPS
The minimum cardinality between thesecond event and the first event is
typically one, because the second event
cant occur without the first event havingoccurred.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
132/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 132 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
133/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 133 of 138
CARDINALITIES OF RELATIONSHIPS
An exception could occur if the first eventis not required for the second event to
occur.
Example: If a sale can be made withoutfirst taking an order, then the minimum
cardinality between saleand take order
could be zero.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
134/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 134 of 138
CARDINALITIES OF RELATIONSHIPS
The maximums in the cardinalities betweenevents can be either one or many, and these
maximums vary based on business practices.
We saw this when we looked at the four different
possibilities for the relationships between sales
and cash receipts previously.
On the following slides, see if you can explain
the maximums between the three events.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
135/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 135 of 138
CARDINALITIES OF RELATIONSHIPS
Sale
Receive
Cash
Take Order
Inventory
Cash
Customer
Employee
Customer
Employee
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
136/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 136 of 138
CARDINALITIES OF RELATIONSHIPS
Uniqueness of REA diagrams Each organization will have its own unique
REA diagram.
Business practices differ across companies, socardinalities and relationships will differ.
A given organization can change business
practices, leading to a change in its REA diagram:
A change in practice could cause a change in
cardinalities.
Could even lead to the inclusion of different entities on
the diagram.
STEP THREE: DETERMINE
CARDINALITIES OF RELATIONSHIPS
8/11/2019 Romney Ch15
137/138
2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 137 of 138
CARDINALITIES OF RELATIONSHIPS
Data modeling can be complex andrepetitive.
Data modelers must discuss their drafts of
models with intended users to ensure that: Key dimensions are not omitted or misunderstood.
Terminology is consistent.
SUMMARY
8/11/2019 Romney Ch15
138/138
In this chapter, youve learned about the steps tofollow in designing and implementing a database
system.
Youve learned how the REA data model is used
to design an AIS database and how an entity-
relationship diagram of an AIS database is
drawn.
Youve also learned how to read REA diagramsand what they reveal about the activities and
Recommended