Introduction
The REA model is an accounting model that was presented by William McCarthy for the first time and later on elaborated in a variety of ways by many researchers. This is essentially a method that helps in capturing information pertaining to the economic phenomena. The REA model basically defines a business as a blend and collection of economic resources, events and agents and also relationships between these three. Even though this model was recommended as an outcome of the study of various theories of accounting, it can possibly also be applied to numerous other domains of businesses and industries. For instance, REA model can be used in inventory control by allocating merchandises to resources, allocations to events, and vendors to agents. Alternatively, this model can also be applied to pay rolling by allocating time duration to resources, time cards to the events, and workforces to agents. The REA model is a highly promising demonstrating technique that helps in the development of extremely useful and promising business applications due to the fact that his model is comprised of a solid underpinning and it can be easily applied to nearly any and every domain of business.
The primary objective of business process modeling and reengineering, essentially, is to effectively cope with the integrated business instead of the stove-piped form of work flow. Integrated process management can become a reality only when the various processes of business are recognized and comprehended properly; and for this understanding to be achieved, there is need for a cross-functional amalgamation of numerous economic events and workflow responsibilities into the business processes.
The REA model is essentially a modeling technique extracted from a number of accounting theories and is proposed to be a base for information systems. It can minimize the gaps that exist amidst business processes and the software supporting these processes.
Conclusion
The REA accounting model was presented in the year 1982 as: ‘A Generalized Framework for Accounting Systems in a Shared Data Environment’. One of the first and crucial objectives of this REA model was to substitute the traditional functional-driven, remote file systems with a cohesive information organization. Rather than building discrete and redundant applications for the purpose of order processing, freight, payments, etc., a single cross-functional organization-wide information construction was to be quantified and designed. Database technology has traditionally supported the application and operation of such an organization-wide information structure, and object technology with mechanisms offers possibly superior and much better platforms for putting these information structures to practice. Another objective of this REA model was the domain-specific configuring of the information architecture newly implemented organization-wide. Application of the REA model offers an integrated system that elucidates the consumption of resources through various value-added processes of the organization. This helps in REA becoming not just a valuable instrument for the concrete design that helps in the formation of the information system but also for modeling the business process as a whole. In this paper, we discussed the use of REA object templates to sales/collection processes and jobs of two different situations in two different organizational set-ups.
The organizations dealt in this paper were two different organizations, one selling desktop computers and the other being a manufacturing firm that makes MP3 players. For both the organizations considered in this paper, individual REA models were prepared, one for the sales/collection process and other for the purchase cash payment process. Cardinalities for all the associations present were provided along with details pertaining to the various attributes that are required for implementing the REA model in the relational database.
Bibliography
Johnson Hiroaki Nakamura and Ralph E. Adaptive Framework for the REA Accounting Model [Report]. - Urbana, IL : OOPSLA’98 Workshop on Business Object Design and Implementation IV, 1998.
McCarthy William E. The REA Accounting Model: A Generalized Framework for Accounting Systems in a Shared Data Environment [Journal]. - [s.l.] : The Accounting Review, July 1982. - pp. 554-78.
T. Gale & J.Eldred Getting Results with the Object-Oriented Enterprise Model [Book]. - [s.l.] : SIGS Books, 1996.
