Chapter 18

Implementing an REA Model in a Relational Database

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Learning Objectives
Integrate separate REA diagrams for individual business
cycles into a single, comprehensive organization-wide
REA diagram.
Build a set of tables to implement an REA model of an AIS
in a relational database.
Explain how to write queries to retrieve information from
an AIS relational database built according to the REA
data model.

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REA DiagramRevenue Cycle

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REA DiagramExpenditure Cycle

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REA DiagramPayroll Cycle

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REA Redundancies
Separate REA for an organization will have redundant entities
Resource
Each resource entity must be connected to:
The resource entity is linked to event entities in one business cycle
and to event entities in the other cycle
One event that increases the resource and,
One event that decreases the resource
No effect on cardinality
Events
Alters the minimum cardinalities associated with the other events
that are related to the merged event
May be linked to either an event that is part of one business
cycle or to an event that is part of another cycle but cannot be
linked to both events
The minimum cardinality associated with the other events
must be 0 in the integrated REA diagram

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Payroll Cycle

Revenue Cycle

Expenditure Cycle

Integrated REA Diagram

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Cardinality Effect of Merging

Resources

Cardinalities between resource and entities remain the same.

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Cardinality Effect of Merging Events

The cardinality between Disburse Cash and Supplier and Employee (as
payee) is now 0 to 1, that is, a disbursement can be made to the supplier
or the employee but not both!
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Rules for Creating Integrated REA

Diagram
1.

Every event must be linked to at least one resource.

2.

Every event must be linked to two agents who participate

in that event.

3.

Every event that involves the disposition of a resource must

be linked to an event that involves the acquisition of a
resource.

4.

Every resource must be linked to at least one event that

increments that resource and to at least one event that
decrements that resource.

5.

If event A can be linked to more than one other event, but

cannot be linked simultaneously to all of those other
events, then the REA diagram should show that event A is
linked to a minimum of 0 of each of those other events.

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Using REA Diagram to Create

Relational Database
Advantage:
Ensures the elimination of anomalies:
Update
Insert

Delete

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REA to Database Steps

1. Create a table for each distinct entity in the diagram and for
each many-to-many relationship.
2. Assign attributes to appropriate tables.
Identify primary keys:
Attributes that uniquely identifies each record.
For M:N relationships the primary key consists of two attributes
that represent the primary keys of each entity linked in that
relationship.
Identify remaining attributes for table.

3. Use foreign keys to implement one-to-one and one-to-many

relationships.

An attribute of one entity that is itself the primary key of another

entity.

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Retrieving Information from REA

Database
Journals
Information contained in event tables

Ledgers
Information contained in resource tables

Financial statements
Information contained in resources and
Information on imbalances
Accounts receivable
Sales transactions for which customer payments have not
yet been received
Accounts payable
Purchases from suppliers that have not yet been paid for

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