Final answer:
The second step in developing an REA diagram is identifying the resources affected by each event and the agents who participate in those events, which is critical in visualizing the flow of information in business processes.
Step-by-step explanation:
The second step in developing an REA diagram is: C. Identify the resources affected by each event and the agents who participate in those events. This step is crucial for understanding the flow of information within a business process. The REA model stands for Resources, Events, and Agents, which are the core elements of this accounting information system (AIS) tool.
In an REA diagram, the identification of resources, events, and agents provides a structured way to visualize how business transactions are processed. Resources are the economic elements that have value, such as cash or inventory. Events are the occurrences that affect resources and are of interest to management, from sales to purchases. Agents are the individuals or entities that participate in events, like customers or employees. Identifying these elements involves examining the business processes to determine what exactly should be depicted in the REA diagram. By doing so, one creates a clear representation of how the business resources are utilized, the events that affect them, and who is involved in these transactions.