An Integrated REA Diagram Merges Multiple Copies of Some Entities

question 73

Multiple Choice

An integrated REA diagram merges multiple copies of some entities in order to

• A)minimize the repetition of agent entities.
• B)maximize the legibility of the diagram by avoiding the need to have relationship lines cross one another.
• C)keep the diagram less complex.
• D)maintain a clear representation of the activities that are represented by the diagram.

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Definitions:

Operating Activities

Transactions and events that impact the net income of a business, primarily related to its core operations.

Indirect Method

A way of reporting cash flows from operating activities in the cash flow statement, starting with net income and adjusting for non-cash transactions.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Statement of Cash Flows

A financial report summarizing the amount of cash and cash equivalents entering and leaving a company.