ER is an acronym for Entity Relationship diagrams, which are used to instantiate how the entities like objects and people correlate to each other within a system. The diagrams are applied in software engineering, education finance, and other related fields to either design or correct errors in relational databases. On the other hand, REA is an acronym for Resource, Event, and Agent diagram. These models explain the design and specifying of the financial systems (Rosli et al., 2009). The models are used to identify main entities used in a company, such as the resources monitored by an organization, events that managers need to plan, and agents.
The REA and ER diagrams have the following similarities; first, both are event diagrams. An ER shows a relationship between various entities. The diagrams can show the triggers as obstructions that have been placed upon the correlations between the entities and attributes. The diagram also applies a single entity, like relationships and attributes. Second, both diagrams give their entities names in the singular. The REA diagrams issue singular names to the agent and resource entities. Third, both diagrams are used in controlling the accounting information systems. ER diagrams evaluate the flow of data within the business financial information systems. The REA diagram analyzes a company’s financial information.
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The difference between the ER is REA diagrams are; first, the ER diagrams contain one class, and their multiplicity determines their adjacency to other entities, while REA diagrams are categorized into three classes: resource event and agent. The three classes are categorized into arrays on the REA diagrams. Second, the ER diagrams do not represent the sequence stages of events as the cardinality and relations used to show relationships are not presented well. On the other hand, the REA diagrams clearly represent their entities by organizing them in an orderly manner in a top-down approach, making the nontechnical users easy to understand. Third, the ER diagrams are applied for comparative data as they only show the relational structures. On the other hand, REA diagrams are used in relational and centralized data. The ER diagrams shows static pictures of a fundamental business phenomenon.
The REA and ER accounting systems affect the accounting systems in the following ways. The models view the company's financial data as a system to gather information about resources, agents, and events within a company's financial processes. The REA enables the company's management to track the effect of commitment when the customer has paid for goods and has not received them, providing better services and planning purposes. The REA relationships reflect the main company's concept; it engages in activities that use resources with other resources' objective in exchange. They enable the monitoring of the employees to ensure accountability. The ER diagrams re-organize the business processes and map out the information flow in the company's processes. Also, they are used to analyze the company's data to determine errors, hence smoothening business processes and uncovering information easily to improve results. The diagrams also aid a company’s management in making appropriate decisions. They allow cash flows when received based on cash techniques of accounting. They provide accounting statements and reports about the data collected and stored in the company's database.
The ER diagram would be suitable over REA diagrams when one wishes to demonstrate or understand the relationship between data that the entity relationships define the business rules the business needs. They can be used to communicate data requirements to the business analysts and when one wants to understand the attributes contained on each data element. On the other hand, REA diagrams would be suitable when linking a company to all its resources, agents, economics, and events. Also, the REA diagrams can be implemented on companies with several departments to link all the entities and analyze and specify the accounting information to serve users' requirements within a company. ER diagrams would be suitable for small companies when a company needs specific information, and when there is a need to analyze a single entity or a department.
References
Rosli, K., Ahmi, A., & Mohamad, L. (2009). Resource-Event-Agent (REA) Modelling in Revenue Information System (RIS) Development: Smart Application for Direct-Selling Dealers and SMEs. Journal For The Advancement Of Science & Arts, 1 (1), 43-61. https://translate.google.com/translate?hl=sw&sl=en&u=https://www.researchgate.net/publication/258848454_Resource-Event-
