BusinessEvents_Sp2011

BusinessEvents_Sp2011 - Business Events Identify and...

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Business Events
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Identify and Document Individual Exchanges Identify the events that increase or decrease the quantity of a firm’s resources, termed economic events . Examples of economic events are sale, cash receipt, purchase, and raw material issue. Resources are defined as “objects that are (1) scarce and have utility and (2) are under the control of an enterprise” (Ijiri 1975 as quoted in McCarthy 1982 p. 562). Common examples of resources are cash, inventory, and fixed assets. Agents are the third component in REA and are defined as those who participate in the events. Two agents must be identified: one within the business unit who was responsible for the event, and the second, outside the business unit, with whom the event was performed. The outside agent is often outside of the organization, such as a customer or vendor. Identifying the individuals responsible for each transaction helps control the economic resources. If there is a problem with the quantity of a resource, an auditor is able to trace the transactions to individuals. Examples of internal agents include salesperson, supervisors, and clerks. Outside agents would include vendors, customers, and investors.
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Business Event-level Analysis For simple organizations, their economic event-level REA diagram would describe all of the processes in their organization. However, as businesses become more complex, more activities are often
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This note was uploaded on 09/27/2011 for the course 6K 180 taught by Professor Staff during the Spring '11 term at University of Iowa.

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BusinessEvents_Sp2011 - Business Events Identify and...

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