Question

Star Garage Limited provides motor vehicle accessories and services for a wide range of vehicles in Dominica. Customers purchase parts to take to their individual mechanics to complete vehicle repairs or they may choose to bring their vehicles to Star Garage for in-house repairs and servicing. This means that they pay for both the parts and the labour associated with the type of service required. Some services do not include any new parts, just the labour costs for that service. Individual customers must pay for all parts purchases in full at the time of sale. Individual customers must pay 50% down when they bring their vehicles in for servicing and pay the balance when they come to pick them up when the job is completed. Corporate customers, however, are billed monthly for all sales (parts or services). Although Star Garage Limited has several different banking accounts, all sales are deposited intact into its main chequing account. Star Garage Limited purchases its inventory of parts from more than a dozen different vendors. Orders are usually delivered the next day; sometimes, however, suppliers ship only partial orders. Star Garage Limited pays cash for some of its purchases but usually pays by the 8 th of the month for all purchases made the prior month. None of its suppliers allows it to make installment payments.

Draw an integrated rea diagram for star garage’s limited revenue and expenditure cycles.

Answer 1

An integrated REA diagram for Star Garage Limited's revenue and expenditure cycles involves identifying the resources (inventory and funds), events (sales, services, purchases, and payments), and agents (customers and vendors) in their operations, then visually linking these elements in a diagram.

Step-by-step explanation:

To draw an integrated REA (Resources, Events, Agents) diagram for Star Garage Limited's revenue and expenditure cycles, we must identify the key resources, events, and agents involved in their business operations. The resources would include the inventory of motor vehicle parts and the monetary funds within their banking accounts. The events in the revenue cycle are the sale of parts, provision of services, and collection of receivables, while in the expenditure cycle they include the procurement of inventory and making payments to suppliers.

Agents would comprise individual and corporate customers for the revenue cycle and vendors for the expenditure cycle.

In the revenue cycle, individual customers engage in events such as parts sales and vehicle servicing, requiring payments at different points (full payment for parts and 50% upfront for services). Conversely, corporate customers receive monthly bills. In the expenditure cycle, Star Garage Limited acquires parts from vendors, generally paying by the 8th of the following month, with some payments made in cash.

An REA diagram would visually link these resources, events, and agents with arrows representing the flow of transactions and resources among them. It would typically display separate swimlanes or sections for the revenue and expenditure cycles, with internal controls such as depositing all sales into a main chequing account also depicted.

Since this is a conceptual exercise, the actual diagrammatic representation is not included here. However, for an assignment or practical application, one would use a flowcharting tool to create the diagram based on these conceptual elements.