Question

Why is it not necessary to model activities such as entering information about customers or suppliers, mailing invoices to customers, and recording invoices received from suppliers as events in an REA diagram?

Answer 1

Step 1

REA DATA MODEL:

• It is a tool that has resources , events, and agents
• The REA data model is utilized to create databases that are necessary for transaction processing as well as for the need of management analsis
• These databases include the fallowing events:

1. Changing the number of resources
2. indicate commitments to future exchange events
3. When management want to plan,evaluate and control any activities those information should be provided. But the activities mentioned in the question do not meet any of these requirements.

Step 2

The information related to the customer and supplier is saved in respective rows of the customer table and supplier table.

• most of the informations entered at the time of creation of database also when the customer table and supplier table are populated
• Later, new rows would be entered when the management wants to plan, evaluate and control events like:

1. A business call
2. When a new customer approaches for an order
3. Placing a new order with a new supplier.

Some of the data processing activities like report preparation and sorting data from a form are not explicitly modeled because these activities neither change information for a resource nor for the activities that management wants to control. Perhaps, the information in the vendor invoice will be present in the purchasing history of the company's database also.

Step 3

So, it is not necessary to generate an activity explicitly through the mails or recording them in the form of invoice because of the events in the REA data model.

Many companies are suggesting their suppliers to stop sending the invoices. All this is due to the Enterprise Resource Planning (ERP) system like Accounting Information System.