REA, Resource, events and agents
REA is an acronym for resources, events, and agents. The REA model views accounting data collection as a system to collect data about the resources, events, and agents within business processes. Business processes involve events in which resources are exchanged by agents. An example of such an event is a sale. The resources exchanged are inventory and cash. The agents are the company (seller) and the customer (buyer). An REA model suggests that the basic data collected should be the resources, events, and agents in this exchange. Debits, credits, ledgers, and journals are not necessary in such a model. The data are collected and stored in a database that can then be used to provide reports and financial statements. The data include the details about the resources, events, and agents involved in the exchange.
It is an accounting system that can be used to quantify all flows - specifically real flows (not just money flows).
Three overviews of REA:
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