Premium Essay

The Rea Accounting Model: Intellectual Heritage and Prospects for Progress

In: Computers and Technology

Submitted By tangtang558
Words 10700
Pages 43
The REA Accounting Model: Intellectual Heritage and Prospects for Progress
Cheryl L. Dunn
Florida State University
William E. McCarthy
Michigan State University

Send page proofs to:

William E. McCarthy
Department of Accounting
N270 North Business Complex
Michigan State University
East Lansing, MI 48824

Acknowledgments: The authors would like to acknowledge the helpful comments of three anonymous referees and the editor on two earlier versions of this paper. Helpful pointers into the literature were provided by William Schrader and Stephen Zeff. We would also like to acknowledge comments received at the Michigan State University 1995 Summer AIS
Colloquium and at the 1995 Workshop on Semantic Modeling of Accounting Phenomena.
Financial support was received from Arthur Andersen LLP and from the Departments of
Accounting at Grand Valley State University and Michigan State University.

The REA Accounting Model: Intellectual Heritage and Prospects for Progress
ABSTRACT: Researchers often equate database accounting models in general and the
Resources-Events-Agents (REA) accounting model in particular with events accounting as proposed by Sorter (1969). In fact, REA accounting, database accounting, and events accounting are very different. Because REA accounting has become a popular topic in AIS research, it is important to agree on exactly what is meant by certain ideas, both in concept and in historical origin. This article clarifies the intellectual heritage of the REA accounting model and highlights the differences between the terms events accounting, database accounting, semantically-modeled accounting, and REA accounting. It also discusses potentially productive directions for AIS research. Key words:

REA accounting, events accounting, database accounting, semantically modeled accounting, accounting models, accounting…...

Similar Documents

Premium Essay

Internation Accounting Thoughtput Model

...Introduction ABC is company which founded in UK, currently their director want to invest business in either china or US. This paper applies the Throughput Model illustrates how the process of an individual’s decision choice is made Throughput Model pathways Generally, there are six pathways (1) P → D ,(2) P → J → D ,(3) I → P → D, (4) I → J → D ,(5) P → I → J → D and (6) I → P → J → D. They represent psychological egoism, deontology, relativist, utilitarianism, virtue ethics, and ethics of care, respectively. (1) “P → D represents psychological egoism that stresses individuals are always motivated to act in their perceived self-interest.” (Rodgers, Gago 2001) On the one side, in this ABC case, if their director graduate from US and work for couple year in there. Then they will more likely to invest business in US instead of china. Because US and UK have similar accounting system, moreover there will face less communication barrier. On the other side, if this director is Chinese, he knows a lot about china then he will invest business in china because it fits his person desires. (2) “P → J → D depicts the deontology viewpoint that emphasizes the rights of individuals and on the judgments associated with a particular decision process rather than on its choices.” (Rodgers, Gago 2001) This model are rules based, followed by guide lines. ABC company’s decision which place to invest business should vote by board of director. Another important aspect needs to......

Words: 669 - Pages: 3

Premium Essay

Intellectual Capital

...Another article that we choose is "dealing with the management of intellectual capital". Intellectual capital means the collective knowledge of the individuals in an organization or society. This knowledge can be used to produce wealth, multiply output of physical assets, gain competitive advantage, and/or to enhance value of other types of capital. Intellectual capital includes customer capital, human capital, intellectual property, and structural capital. As the intellectual capital is intangible, it is difficult for the accountants to make valuation on it. In this article, it said" it is observed that valuation should not be left to the market but that internally the role of strategic management accounting can inform valuation, support decision and promote competitive advantage." There are three special and important element in this model. It used a discounted economic approach to determine the comprehensive value of the enterprise. It models the firm as a series of inputs, conversion processes and financial outputs. These are joined together using cause and effect linkages which are developments of performance measures. The benefits of this model are information is generated in a form that can be used as a supplement to the annual accounts for the benefit of management and shakeholders. It can assist management in making decisions, particularly where alternatives need to be investigated and valued. It avoids the categorisation of the......

Words: 325 - Pages: 2

Premium Essay

Management Accounting

...Handbook of Management Accounting Research Volume 3 Edited by CHRISTOPHER S. CHAPMAN Imperial College London, UK ANTHONY G. HOPWOOD University of Oxford, UK MICHAEL D. SHIELDS Michigan State University, USA AMSTERDAM – BOSTON – HEIDELBERG – LONDON – NEW YORK – OXFORD PARIS – SAN DIEGO – SAN FRANCISCO – SINGAPORE – SYDNEY – TOKYO Elsevier The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, UK First edition 2009 Copyright © 2009 Elsevier Ltd. All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone ( 44) (0) 1865 843830; fax ( 44) (0) 1865 853333; email: Alternatively visit the Science and Technology Books website at for further information Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record......

Words: 187223 - Pages: 749

Premium Essay

It Rea Approach

...Resources, Events, and Agents Model * REA is an approach to database design meant to overcome problems with traditional approaches: * formalized data modeling and design of IS * use of centralized database * use of relational database structure * collects detailed financial and non-financial data * supports accounting and non-accounting analysis * supports multiple user views * supports enterprise-wide planning * REA models consists of three entity types and the associations linking them. * Resources * Events * Agents Resources in the REA Model * Resources – the ‘assets’ of the company * things of economic value * objects of economic exchanges able to generate revenue * objects that are scarce and under the control of the organization * can be tangible or intangible * Does not include some traditional accounting assets: * artifacts that can be generated from other primary data * for example, accounts receivables Events in the REA Model * Events are phenomena that effect changes in resources. * a source of detailed data in the REA approach to databases * Events fall into two groups: * Economic – increases or decreases resources * Support – control, planning, and other management activities; but do not directly affect resources * Agents in the REA Model * Agents can be individuals or......

Words: 250 - Pages: 1

Premium Essay

Accounting Information System

...Polytechnic University of the Philippines Sta. Mesa, Manila College of Accountancy and Finance CHAPTER 1: ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT Submitted By: Angeles, Jireh Nesamiel L. Carullo, Shery Lyn A. Gutierrez, Joe Mar C. Monforte, Roselyn G. Reyes, Edward Angelo A. BSA 3-9 Submittes To: Prof. Leandro Cruz Fua WHAT’S NEW IN ACCOUNTING INFORMATION SYSTEMS? Cloud Computing—Impact for Accountants According to Ron Gill, cloud computing is a way of using business applications over the Internet—such as the way you use the Internet for your bank transactions. Think of cloud computing as a way to increase IT capacity or add capabilities without investing in new infrastructure, training new people, or licensing new software. Mostly, we’re talking about a subscription-based or pay-per-use service that makes IT’s existing capabilities scalable whenever the need exists. Estimates suggest that the fast-growing cloud computing industry will reach $42 billion by 2012. Cloud computing resources may be categorized as data storage, infrastructure and platform, or application software (i.e., business applications such as purchases, HR, sales, etc.). If a firm would like to take advantage of cloud computing, it would most likely need to subscribe to all three of these categories from the service provider. For example, business applications depend on company data that is stored in the database, and data storage depends on the appropriate......

Words: 2839 - Pages: 12

Premium Essay

The Prospects for Management Accounting as a Career, in the Us and Globally

...Accounting has long been considered a reliable profession, but it's recently become something else in demand. Out of 565 employers from around the world, 45 percent plan to hire master of accounting graduates this year, according to a survey from the Graduate Management Admission Council. In last year's survey, only 36 percent of employers planned to hire business school graduates with this degree. Full-time master in accountingprograms usually take one year to complete and accept students fresh out of undergrad. The job hunt for many of these students begins before they step foot on campus. "We can connect with the students that have been accepted into the program – immediately – and start working with them and preparing them for fall recruiting," says Andy Rabitoy, director for undergraduate career services at the Foster School of Business at the University of Washington, which also works with students pursuing a master of professional accounting. His office helps students with several job-related needs such as interview preparation and fine-tuning their resumes. Incoming graduate accounting students at the Fisher College of Business at Ohio State University are put in touch with the career services office over the summer to sharpen their cover letters and perfect other skills that may help secure a job, says Stephen Singer, director of career management and corporate relations at Fisher. Classes begin Aug. 27 and on-campus recruiting begins the first week of September.......

Words: 811 - Pages: 4

Premium Essay

Intellectual Capital report intellectual capital Summary In today’s knowledge economy, intellectual capital has been playing an increasingly significant role in creating corporate sustainable competitive advantages and becomes instrumental in determining the enterprise value. Though measuring the value of intellectual capital is difficult, with the emerging of intellectual capital valuation models, a number of leading companies have decided to make additional intellectual capital disclosure. This paper discusses and illustrates the intellectual capital statement. How to effectively measure and disclose intellectual capital in external financial reporting and how the accounting rules for reporting intangibles limit the recognition of intellectual capital and will also be discussed. The final part is proposed approaches to intellectual capital reporting. Introduction Our world is in the rise of new economy, principally driven by the information and knowledge. Today, a number of companies and organizations rely heavily on the knowledge and skills of their stuff and the network of the customer. As these intangible assets became increasingly critical, the limitations on financial statements in explaining a company’s value stress the fact that the source of economic value is no longer the production of material goods but the creation of intellectual capital. Background Definition Stewart first defined intellectual capital as intellectual material-knowledge, information, intellectual property,...

Words: 1937 - Pages: 8

Premium Essay

Management Accounting Models

...Product costs: the costs of manufacturing our products; or 2      Period costs: these are the costs other than product costs that are charged to, debited to, or written off to the income statement each period. The classification of Product Costs: Direct costs: Direct costs are generally seen to be variable costs and they are called direct costs because they are directly associated with manufacturing. In turn, the direct costs can include: • Direct materials: plywood, wooden battens, fabric for the seat and the back, nails, screws, glue. • Direct labour: sawyers, drillers, assemblers, painters, polishers, upholsterers • Direct expense: this is a strange cost that many texts don't include; but (International Accounting Standard) IAS 2, for example, includes it.  Direct expenses can include the costs of special designs for one batch, or run, of a particular set of tables and/or chairs, the cost of buying or hiring special machinery to make a limited edition of a set of chairs. Total direct costs are collectively known as Prime Costs and we can see that Product Costs are the sum of Prime costs and Overheads. Indirect Costs: Indirect costs are those costs that are incurred in the factory but that cannot be directly associate with manufacture.  Again these costs are classified according to the three elements of cost, materials labour and overheads. • Indirect materials: Some costs that we have included as direct materials would be......

Words: 17187 - Pages: 69

Premium Essay

European Accounting Model

...Advances in Accounting, incorporating Advances in International Accounting 29 (2013) 124–133 Contents lists available at SciVerse ScienceDirect Advances in Accounting, incorporating Advances in International Accounting journal homepage: Continental European accounting model and accounting modernization in Germany Andreas Hellmann ⁎, Hector Perera 1, Chris Patel 2 Department of Accounting and Corporate Governance, Faculty of Business and Economics, Macquarie University, Sydney, NSW 2109, Australia a r t i c l e i n f o Keywords: Convergence German Commercial Code (Handelsgesetzbuch) International Financial Reporting Standards Act to Modernize Accounting Law (Bilanzrechtsmodernisierungsgesetz) Classification of accounting systems a b s t r a c t Classification techniques based on one or few dimensions are widely used in research studies and textbooks to explain and predict the development of accounting systems internationally. However, their usefulness in international accounting has been limited in today's globalized world. For example, in the context of the EU, IFRS are required for consolidated accounting, while national accounting systems continue to be the dominant system for unconsolidated accounting in many countries. Using Germany as a case study, the objective of this paper is to examine whether Germany can still be classified within the Continental European model of accounting following the Act to......

Words: 10868 - Pages: 44

Premium Essay

Development, Problem, Prospects and Progress of Entrepreneurship Development in Narayanganj Sadar Upazilla: a Short Case Study

... Development, Problem, Prospects and Progress of Entrepreneurship development in Narayanganj Sadar Upazilla: A Short Case study Entrepreneurship - the process of starting a business; typically a startup company offering an innovative product, process or service is termed as entrepreneurship. The entrepreneur perceives an opportunity and often exhibits biases in taking the decision to exploit the opportunity. Entrepreneurship can be defined by describing what entrepreneurs do. For example: “Entrepreneurs use personal initiative, and engage in calculated risk-taking, to create new business ventures by raising resources to apply innovative new ideas solve problems, meet challenges, or satisfy the needs of a clearly defined market.” It refers to activities related to undertaking the efforts to set up an industry or business establishment. He who takes to establish business is the entrepreneur. Entrepreneurship is an entity of people with the ability to see an opportunity where necessary capital, labor & other inputs operating together & successfully along with know-how skill and have willingness to take the personal risk of success or failure. According to Jean Baptist Say, ‘Entrepreneur is an economic agent to unite all the means of production.’ An entrepreneur is an individual who takes moderate risks and brings innovation. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. According......

Words: 4916 - Pages: 20

Premium Essay

Intellectual Capital

...Intellectual Capital The term intellectual capital (IC) is synonymous with Intangible capital. IC collectively refers to all the resources and assets that defy conventional accounting measures, but which still determine the value and the competitiveness of an enterprise. IC is commonly divided into the areas of Human Capital, Structural Capital, Relationship/Relational Capital, and the Business Model. In our modern Information and Knowledge Economy, intangibles have progressively become the driving factors around which business revolves. Conventional bricks-and-mortar accounting is no longer sufficient to explain how Google, Netflix, LinkedIn, Apple, and General Electric are far more valuable than their financial assets. As of June 2011, Netflix's tangible equity was $290 million USD, yet its market value is over $12.8 billion USD (source: Yahoo Finances). The Apple Corporation, with $55 billion USD in conventional hard assets, was valued at over $272 billion USD with its intellectual capital included (source: Yahoo Finances). These dramatic value differences in company wealth defy traditional accounting logic. Intellectual capital is the new economics discipline that strives to explain the value of these high-knowledge organizations, and how they add value for their customers far beyond what bricks-and-mortar can measure. Karl-Erik Sveiby and Leif Edvinsson are commonly considered to be the first thought leaders of modern Intellectual Capital. Thomas Stewart and Patrick......

Words: 850 - Pages: 4

Premium Essay


...UNIVERSITY HCMC ---------***-------- MIDTERM PROJECT SUBJECT: INTELLECTUAL PROPERTY RIGHTS Major: External Economics IP AND THE PROMOTION OF BIODIVERSITY AND TRADITIONAL KNOWLEDGE AND BENEFIT SHARING WITH PROVIDERS COMMUNITIES Class: K53CLC3 – Group 6 Lecturer: Pham Thi Mai Khanh Ho Chi Minh City, February 2016 I GROUP MEMBERS No 1 2 3 4 5 6 Name Khúc Thị Kiều Thương Phạm Mỹ Tiên Trương Thủy Tiên Nguyễn Hoàng Minh Trâm Lương Gia Vĩ Ngô Nhật Vy ID 1401025125 1401025128 1401025129 1401025133 1401025159 1401025162 II TABLE OF CONTENTS INTRODUCTION ............................................................................................................................. 1 A. BACKGROUND ........................................................................................................................... 2 I. Overview of Intellectual Property ............................................................................................... 2 II. Overvew of Biodiversity ............................................................................................................ 2 III. Overview of Traditional Knowledge ....................................................................................... 4 B. CURRENT SCENERIO ................................................................................................................. 5 I. Intellectual Property in Today World......

Words: 6765 - Pages: 28

Premium Essay

Heritage Assessment

...Heritage Assessment: Applying The Heritage Assessment Jake Freeman GRAND CANYON UNIVERSITY: NRS - 429V 10/31/2011 Applying the heritage assessment can be useful with integration into the health care system. First impressions go along with the proper approach. If you look at it this way first impressions are important in every culture. With the plethora of cultures out there and each family shaped by these values and beliefs a good approach is always an informed one. With a little common courtesy, topped off with some minimal knowledge of ones heritage you can get started on a good foot with your patient. So many cultures are part of the United States culture that being informed is our responsibility as nurses. Incorporating a cultural competent nurse into the work force makes for an appropriate health care experience. This paper will discuss the heritage of 3 different families. Families A,B, and C and how these families practice health traditions. How their parents where brought up and how they’ve been influenced through old ways. This assessment is to create an understanding of how useful the heritage assessment is. It puts patient and practitioner on a level where both participants can feel comfortable with communication, and interaction in order to provide quality care. Family A is from Gilbert, AZ. The wife is from India. Her spouse is from Boston, MA. This family is very matriarchal and the wife’s ways of culture are strong standing...

Words: 1414 - Pages: 6

Premium Essay

Intellectual Capital Disclosure

...Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence Researchers: Musa Mangena Richard Pike Jing Li Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence by Musa Mangena Richard Pike Jing Li University of Bradford Published by The Institute of Chartered Accountants of Scotland CA House, 21 Haymarket Yards Edinburgh EH12 5BH First Published 2010 The Institute of Chartered Accountants of Scotland © 2010 ISBN 978-1 904574-14-9 EAN 9781904574149 This book is published for the Research Committee of The Institute of Chartered Accountants of Scotland. The views expressed in this report are those of the authors and do not necessarily represent the views of the Council of the Institute or the Research Committee. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or publisher. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without prior permission of the publisher. Printed and bound in Great Britain by T. J. International Ltd. C 1. ontents Foreword ...................................................................................... i Acknowledgements ......................................................

Words: 14662 - Pages: 59

Free Essay

Rea Model

...REA Model The REA model was developed by William E. McCarthy in 1982 as a standard accounting model where he introduced the concept of resources, agents, and events (McCArthy, 1982).He designed the model in attempts make AIS an integral part of an organizations database system by removing elements such as double journal entries (McCArthy, 1982). Resources are those items that add economic value to the organisation. These resources are also limited and are controlled by the organisation. Examples of resources include goods, cash, or services that the organisation acquires and then uses to add value to its activities. Events refer to the activities put in place that add value to resources. This can include production and consumption. Agents are the people or organizations involved in carrying out the events. For example, agents are considered to be employees and customers. Today, the purpose of REA expends to assisting in system design, helping management gather information from processes by identifying relationships events have with the resources and agents involved. In the basic REA diagram there are three basic patterns that should be the three key elements. These elements are directly related to why resources and agents cannot have linkages between resources/resources, agents/agents, and agents/resources. Per the pattern of the basic REA diagram the key elements are: • Each event must be linked to at least one resource • Each event must be linked to another......

Words: 276 - Pages: 2