Question

Subject: Accounting information system/Resource event agent(REA)

Question: Why would a company adopt the REA approach to database design?

Answer 1

Before understanding why company should adopt REA approach we should know what REA approach is, it is wide central base of accounting in which R denoted resources of the organization

E are economic activities effecting an organization, and A are agents participating in economic activities.

Why it should be adopted:-

The traditional method of accounting is narrow and was non integrated activity of an organization.

The REA method is the modern method which has a very wide base which means it is not only serving as accounting support but also as operational support by helping in operational decision making rather than mere accounting decisions.

Thus, REA method is wider concept and helps in planning for overall improvement in effeciency of the organization.