Elegant Limited sells restored classic cars. Most of its customers are private buyers who buy cars for themselves. However, some of them are investors who buy multiple cars and hold them for resale. All sales of Elegant Limited are for cash. Depict the association and cardinality for the sales of cars at Elegant Limited based on REA model.

Elegant Limited

Depiction of the Association and Cardinality for the Sales of Cars based on the REA Model:

1. Association: This is about the relationships that exist among the economic elements involved in the REA model.  They are Economic Resources, Economic Events, and Economic Agents.  These elements interact during each business transaction in such interconnected processes that business transactions cannot be complete without any element.

For example, the economic resources during the sale of a car at Elegant Limited are 1) a car and 2) money.  These are exchanged between Elegant Limited and the customer and vice versa.  In the same light, an economic event takes place during the exchange of either a car or money.  While a car is a physical resource (asset), money is a financial resource (asset).  For each of these two events, the economic agents who must interact are the workers at Elegant Limited and the customer whether private buyers or investors.

2. Cardinality:  This refers to the elements that are involved in the REA model.  They are three as already described.  They are Economic Resources, Economic Events, and Economic Agents.  No business transaction is complete where any element is not present.  So, these elements are cardinal in the relationship.

Explanation:

The REA model is an accounting system re-engineering model originally proposed by William E. McCarthy as a generalized accounting model.   It contains the concepts of resources, events and agents (McCarthy 1982).

The model views accounting data collection as a system to collect data about the resources, events, and agents within business processes, thereby suggesting that the basic data collected should be about the resources, events, and agents involved in an exchange.

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