case study 4-5 Pages + charts

Mbab4

romney_ais14_inppt_17.pptx

Home >Business & Finance homework help >Accounting homework help >case study 4-5 Pages + charts

Accounting Information Systems

Fourteenth Edition

Chapter 17

Database Design Using the REA Data Model

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed:

1) MathType Plugin

2) Math Player (free versions available)

3) NVDA Reader (free versions available)

Learning Objectives

Discuss the steps for designing and implementing a database system.

Explain the nature and use of Entity-Relationship (E-R) diagrams.

Explain the content and purpose of the REA data model.

Read an REA diagram and explain what it reveals about the business activities and policies of the organization being modeled.

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

If you recall in Chapter 4, we covered basic concepts of relational databases and experienced from the problems of “using a relational database”. This chapter is focused from the perspective of a “designer” of accounting information systems. A design perspective requires planning and anticipating the users needs.

Database Design Process

Slide 1 - ‹#›

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

There are five basic stages to the database design process:

Systems analysis: identifies user needs, assess feasibility of developing a new system. Defines scope of the new system and makes preliminary decisions on hardware and software requirements.

Conceptual design: developing the different schema for the new system (Chapters 3 and 4 discussed the schemas).

Physical design: translates the internal level schema into the actual database structure.

4. Implementation and conversion: includes all activities associated with transferring data from existing systems to the new database, testing the new system, and training on how to use the new system.

5. Use and Maintenance of new system: monitoring system performance and user satisfaction of new system.

Accountants need to be involved in the implementation of new systems as they understand information, how to control it and use it to report to management the performance of the organization. In addition, accountants can provide management with evaluation of feasibility of the project and can estimate return on investment.

The System Analysis Process

Systems Analysis

Initial planning to determine the need for and feasibility of developing a new system

Judgments about the proposal’s technological and economic feasibility

Identify user information needs

Define the scope of the proposed new system

Gather information about the expected number of users and transaction volumes to make preliminary decisions about hardware and software requirements

Conceptual Design

Developing the different schemas for the new system at the conceptual, external, and internal levels

17-4

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

The System Analysis Process (cont’d)

Physical Design

Translating the internal-level schema into the actual database structures that will be implemented in the new system

New applications are developed

Implementation and Conversion

Includes all the activities associated with transferring data from existing systems to the new database AIS

Testing the new system

Training employees

Maintaining the New System

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Data Modeling

Process of defining an information system so it represents all aspects of an organizations requirements including its interactions with the external environment

Occurs at two stages of the design process:

System analysis

Conceptual design

Data models:

Data flow diagrams (Chapter 3)

Flow charts (Chapter 3)

Entity-relationship diagrams (Chapter 17)

17-6

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Entity-Relationship Diagrams

Entity-Relationship (E-R) diagrams are a graphical way to diagram the relationships between entities

An entity is anything that the organization wants to collect and store information

For AIS database design, the decision is understanding what entities should be included.

REA diagrams are E-R diagrams specifically designed for AIS.

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

There are many ways to depict E-R diagrams as shown in Figure 17-2.

As E-R diagrams can depict anything that the organization wants to collect information on, it is important from a design perspective to understand what should be modeled.

REA Modeling

Resources

Things that have economic value to the organization (e.g., inventory, cash)

Events

Various business activities that management wants to collect information on

Agents

People and organizations that participate in events (both internal (e.g., employees) and external (e.g., customers/vendors) to the organization)

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

REA stands for Resources, Events, Agents.

If you recall from Chapter 1, Figure 1-2 actually depicts the various transaction cycles in the form of the “give-get” relationship of events for each subsystem of an AIS.

REA Diagram Rules

Each event is linked to at least one resource that it affects.

Each event is linked to at least one other event.

Types of links (relationships):

Get events

Give events

Participation events

Each event is linked to at least two participating agents.

17-9

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

REA Basic Template

Slide 1 - ‹#›

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

The basic REA template is a pattern that will depict a business transaction such that:

Each event is linked to at least one resource that it affects (can increase or decrease the resource)

Each event is linked to at least one other event (this is a “give-get” duality: give goods–get cash for sales cycle; get goods–give cash for expenditure cycle (see Figure 17-5 for more give-get dualities))

Each event is linked to at least two participating agents

The lines linking the entity boxes in the template show that the two entities are related (e.g., resource A is increased with the Get event of resource A)

Creating an REA Model

Identify relevant events

Give-get exchange (economic duality)

Identify resources and agents

Resource reduced in give event

Resource acquired in get event

Determine cardinalities of relationships

Nature of the relationship between the two entities

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

The uniqueness of an REA diagram, is that each organization has its own REA diagram.

Business Cycle Give–Get Relationships

17-12

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Cardinality Notation Methods

Graphical symbols

Graphical symbols represent minimum–maximum cardinalities

(Min, Max) notation

Pairs representing the minimum–maximum cardinalities

UML notation

Pairs representing the minimum–maximum cardinalities

Maximums only (Microsoft Access)

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Regardless of the notation of the cardinality, the message is the same: the cardinality pairs can provide someone with the ability to understand the business meaning between the two entities. There are only so many combinations of the cardinalities between two entities:

One to One (1:1) relationships

One to Many (1:N or N:1) relationships

Many to Many (M:N) relationships

If we examine these three types of relationships with the two entities Sales and Cash receipts, we would be able to interpret different meanings of how business is conducted.

(1:1) cardinality between Sales and Cash receipts would indicate that a business does not take credit and is a Point of Sale or “cash and carry” business. For example, a convenience store would not have layaway or store credit but you must pay right away before you can carry your purchase out of the store.

(1:N) between Sales and Cash receipts would indicate that the business requires a deposit or allows you to make payments on a sale or service because of extending credit to their customers. For example, layaway programs require you to make payments before you can take your purchase home.

(N:1) would imply that the company extends credit to the customer but it expects to be paid in full at the end of the month for all of the customer’s sales.

(M:N) would indicate that the company extends credit to their customers and allows them to make payments on many of those sales.

It is important to note that if the business practice changes, then the cardinality depicting the relationship between the two entities may also change.

Three Types of Relationships

Relationship type is based on maximum cardinality:

One-to-One:

One-to-Many:

Many-to-Many:

17-14

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Revenue Cycle REA Diagram

17-11

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Key Terms

Data modeling

Entity-relationship (E-R) diagram

REA data model

Resources

Events

Agents

Cardinalities

Minimum cardinality

Maximum cardinality

One-to-One (1:1) relationship

One-to-Many (1:N) relationship

Many-Many (M:N) relationship

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›

Chapter 17: Database Design Using the REA Data Model

Slide 1 - ‹#›