Exam 18: Implementing an Rea Model in a Relational Database

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A major advantage of the REA data model is that it integrates non-financial and financial data in the AIS and makes both types of data easily accessible to management.In contrast to the REA data model,the general ledger in traditionally designed AISs uses the chart of accounts to store and organize data based on the structure of financial statements.Consequently,traditional AISs contain only data about the financial aspects of transactions.Other information that may be of use to management,such as the time of day a sale occurred or the reason why a customer was purchasing a specific item,would have to be stored in a separate database or information system.The existence of separate systems makes it more difficult for management to easily and quickly access the information it needs.It also provides opportunities for data entry errors to create inconsistencies between systems,thereby reducing the utility of any reports that are generated.Thus,a major benefit of using the REA model as the basis for designing an AIS is the ability to easily integrate information that traditionally appears in financial statements with other,non-financial information necessary to effectively manage operations and evaluate performance.It is vitally important that an organization's AIS be capable of storing both traditional financial measures and other operational performance measures.