The First Step in Developing an REA Diagram for a Specific

question 68

Multiple Choice

The first step in developing an REA diagram for a specific transaction cycle begins with identifying

• A)relevant events.
• B)agents involved.
• C)resources affected.
• D)relationship cardinalities.

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Definitions:

Purchase

The action of buying goods or services for business use or resale.

Par Value

The face value of a bond or stock, representing the amount the issuer agrees to pay at maturity (for bonds) or the nominal value of a share.

Carrying Value

Also known as the book value, it is the value of an asset as reported on the balance sheet, calculated as the original cost minus accumulated depreciation, depletion, or amortization.

Journal Entry

A record of the financial transactions and their effect on specific accounts in the accounting system.