Question

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. (10 marks, maximum 300 words)

Answer 1

Answer:

Elegant Limited

Depiction of the Association and Cardinality for the sales of cars:

1. Association: At Elegant Limited, for a car to be sold, a relationship must be established between Elegant Limited and some of its customers (private buyers and investors).  A sale of car involve the exchange of economic resources.  While Elegant Limited exchanges the cars for cash receipts, the customers exchange their cash for cars.  Two economic resources are involved in the sale of cars, which are exchanged between two economic agents (Elegant Limited and customers) in a business event.

2. Cardinality: In each of the economic events involving the sale of cars to customers and the receipt of cash from customers, two elements are involved, which are the exchanges of resources.  Cars and Cash are the elements that show their cardinality in the economic event.   These elements are known as economic resources.

Explanation:

a) The REA Model is a tool for modelling business processes.  In the sales process, one event would be the “sales of cars,” occasioning the giving of cars for “cash receipt,” the other event.  These two events are linked as a cash receipt occurs in exchange for a sale, and vice versa.  The REA Model was originally proposed in 1982 by William E. McCarthy as a generalized accounting model, and contained the concepts of resources, events and agents, according to wikipedia.com.

b) Association refers to the relationship existing when an event takes place.  At least, two persons are impacted by any event, the giver and the receiver.  For an economic event involving the exchange of resources to happen, two economic agents are involved.  Otherwise, no transaction can take place.  The seller of cars (Elegant Limited) and the buyers (Customers both private and investors).

c) Cardinality refers to the elements that make up an economic event, for example.  The sale of cars and receipt of cash are economic events happening in a business relationship between Elegant Limited and Customers.  The elements that make up the events are the resources (cars and cash), which are exchanged.