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QUESTION
Title:
The REA Approach
Paper Details
There are differences between a REA diagram and an ER diagram. In a 1-2 page paper, describe at least 3 differences and 3 similarities between the two diagrams.
Your paper should include the following:
An explanation of what each acronym stands for and why
Effects (of both REA and ER diagrams) on company's financial statements
Implications of using one diagram over the other and vice versa
| Subject | Business | Pages | 3 | Style | APA |
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Answer
Comparing ER and REA Approach
ER diagram is an acronym for Entity-Relationship model whereas REA diagram is a short form for Resources, Events and Agents diagram. ER diagram mirrors real relationships in the real world as business entities and intricate relationships are the realities of the world and that explains the entity-relationship diagram (Bradford, Richtermeyer & Roberts, 2007). The ER diagram is a relational diagram that enables data modelling for a company. Data modelling enables a company to organize data in a way that relationships with the external environment are captured as well as all other aspects of the organization. REA diagrams are also relational diagrams and are similar to ER diagrams (Dunn, Gerard & Grabski, 2011).
Data contained in a data base can be described in an abstract manner using ER diagrams. For example, ER diagrams are able to show interdependencies between data in different tables in a database. ER diagrams show the relationship between one entity and another, for example between one product and distributors. REA diagrams aims at re-engineering accounting systems that entities use to fit in the current digital era. REA Diagrams are used to design an accounting tool that organizations can use to manage their businesses (Dunn, Gerard & Grabski, 2011).
. The similarities between REA and ER diagrams include the fact that they both use properties of a flow chat in designing them. The two diagrams also define relationships between dependent and independent variables. Both diagrams also help to model relationships between different departments in an organizations and between an entity and external environment (Dunn, Gerard & Grabski, 2011).
There are, however, differences between REA and ER diagrams. Whereas ER diagrams have been implemented, REA diagrams have not been implemented as yet in real life business organizations. ER diagrams describes relationships between a wide arrays of issues while REA Diagrams are only applicable in accounting work. Additionally, while REA diagrams are used to determine the types of information needed to develop a robust accounting information system, ER diagrams are used in other specializations such as doctors, architects and the strategic management among others (Dunn, Gerard & Grabski, 2011). REA diagrams enables an entity to specify and design accounting information to ensure the needs of the entity are served. Several accounting policies have disappeared in REA diagrams such as accounts receivables, provision and double entry book keeping unlike in ER diagrams. ER diagrams can be used for many purposes and not necessarily accounting related work whereas REA diagrams are for designing accounting tools and software only (Dunn, Gerard & Grabski, 2011).
Implications of using ER over REA
Implications of using REA over ER
References
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Bradford, M., Richtermeyer, S. B., & Roberts, D. F. (2007). System diagramming techniques: An analysis of methods used in accounting education and practice. Journal of Information Systems, 21(1), 173-212. Retrieved from https://search.proquest.com/docview/235949966?accountid=45049 Dunn, C. L., Gerard, G. J., & Grabski, S. V. (2011). Diagrammatic attention management and the effect of conceptual model structure on cardinality validation*. Journal of the Association for Information Systems, 12(8), 585-605. Retrieved from https://search.proquest.com/docview/889977177?accountid=45049
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