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Slide 1:E-R and REA Modeling

Accounting 5410 David Plumlee

Slide 2:Documentation vs. Modeling

Documentation involves systems that exists or that have already been designed Modeling is part of the process of creating a system

Slide 3:What is data modeling?

Representing reality with conceptual models Many details found in reality are not included Designer should represent the view of the users (not his/her view)

Slide 4:Approaches to Modeling

Entity-relationship modeling is a popular way of graphically developing data models REA modeling is a special case of E-R modeling used only in accounting applications

Slide 5:Some E-R definitions

Entities ... are “objects” found in reality Relationships ... are ways that entities relate or interact with each other Attributes describe or provide details of entities

Slide 6:Symbols in E-R modeling

Entities… analogous to nouns are represented graphically by rectangles Relationships... analogous to verbs are represented graphically by diamonds Lines connect entities and relationships, and letters and numbers above the line indicate the degree of the relationship

Slide 7:An E-R Model of Marriage

What are the entities? How are the entities “related”?

Slide 8:Marriage model

WIFE Entities... An E-R Model...

Slide 9:Can we model surgery?

Entities doctor operation patent Relationships undergoes performs

Slide 10:Patient/Surgery Relationship

Slide 11:Doctor/Surgery Relationship

Slide 12:View Integration

Patient undergoes surgery performs doctor Combining diagrams into system or subsystem E-R diagram

Slide 13:Cardinality

Specifies how many occurrences of an entity can participate in the given relationship with any one occurrence of the other entity in the relationship 1 M

Slide 14:What kinds of relationships are possible?

One-to-one an inventory item and its reliability represented by 1 One-to-many customer and invoices represented by 1 and M Many-to-many inventory items and customer sales represented by M and N

Slide 15:M-to-M Relationships

RDBMS have difficulty dealing with many-to-many relationships

Slide 16:Relationship tables

Create a relationship table use a composite primary key comprised of the primary keys of the two m-to-m tables then each of the originals has a 1-to-m relationship to the “relationship table”

Slide 17:M-to-M Example

M N

Slide 18:Relationship Table

Tbldoctor(DocName,Specialty,SurgeryType) TbleSurgery(SurgeryType,DRG,ReimburseRate) TblRelate(DocName,SurgeryType,DocSurg) M 1 1 M

Slide 19:Resources, Events and Agents (REA)

Resources similar to assets in that they provide future economic value broader because human resources can be included Events produce changes in resources Agents are people or organizations that participate in events

Slide 20:REA events

“Events” that increase or decrease a company’s resources actual exchanges using resources internally (e.g., fixed assets) Captured in “traditional” accounting systems Modeled through a “duality relationship”

Slide 21:Examples of agents

Internal agents shipping clerks A/P clerks Credit managers External agents bank vendors customers

Slide 22:An “empty” REA diagram

Resource Event Agents

Slide 23:Who are the Agents?

Inside agent Outside agent

Slide 24:What do we mean by duality?

A duality relationship is where we pair related economic events each member of the pair is a either an increment or a decrement to resources Together the pair represents an exchange event these can be separated in time, e.g., credit sale

Slide 25:The Basic REA Exchange Diagram

Resource Increment Resource Decrement

Slide 26:5 Exchanges in the

Equity Investment- cash from/to investors Asset Investment - cash for ship Employment - cash for services Inventory Purchase - silk for cash Sale - cash for silk