Accounting Information Systems: The Processes and Controls, 2nd Edition

APPENDIX: RESOURCES EVENTS AGENTS (REA) IN ACCOUNTING INFORMATION SYSTEMS

The chapters of this book explain accounting information systems from the traditional viewpoint of accounting, which is based on a debit and credit model with ledgers and journals. Data from transactions are captured on source documents, recorded in ledgers and journals using debits and credits, and then summarized into reports and financial statements.

An accounting system can be examined through other models. A popular alternative is the REA model. REA is an acronym for resources, events, and agents. The REA model views accounting data collection as a system to collect data about the resources, events, and agents within business processes. Business processes involve events in which resources are exchanged by agents. An example of such an event is a sale. The resources exchanged are inventory and cash. The agents are the company (seller) and the customer (buyer). An REA model suggests that the basic data collected should be the resources, events, and agents in this exchange. Debits, credits, ledgers, and journals are not necessary in such a model. The data are collected and stored in a database that can then be used to provide reports and financial statements. The data include the details about the resources, events, and agents involved in the exchange.

An example of an REA pattern of an exchange is shown in Exhibit 2-16, which demonstrates the basic aspects of REA. First, notice in the middle of Exhibit ...