• Purpose Accounting : To permit informed decision which will enable scare resources to be allocated efficient to achieved ‘social welfare’.
|Islamic |Conversational |
|To achieve socio – |To meet needs of |
|economic & religions|‘capitalist’ |
|objective of Islamic|economy. |
|Institution & | |
|Muslims Users. | |
|Provide holistic |Provide materialist|
|information |profit-focused info|
| |information |
|Eg : Islamic Bank, |Not meet socio |
|Tabung Haji |economic objective.|
• Karim (1995) – Not just technical.
• More requiring whole new areas of performance measurement.
RELIGION & ACCTG. – AN EXPLOSIVE MIX ?
Problem: Additional of any religious adjective may compromise the objectivity of the discipline.
Stage 1 : what is worldview behind conversational acctg.?
• In a centrally planned, there is lack of profit motive.
• B/sheet & P/L does not make sense in economic system.
• Acctg. Profession never developed in the communist countries.
• Acctg. Is not obj, neutral & value free as it is potrayed to be.
Stage 2 : prob of epistemology – nature & source of knowledge.
• Enlightenment – science has gained adv & replaced religion in defining knowlwdge.
• UK & US – Acctg. Considered science. Mixing religious considered unprofessional.
• Chapra (2000) – science & religions deals with different levels of reality.
|Science |Religions |
|Science deals with physical universe |Religion deals with higher level |
|perceptible by sense |of reality |
|Source of scientific knowledge are |Depends on Revelations well as |
|reason and its method observation and |reason for its knowledge |
|experiment |-help to transform human condition|
| |from “what it is” to “what should |
| |be” |
|Physical & material |Social, mental, emotional & |
| |spiritual |
|Help religion by helping it realize |Help science by reminding it of |
|‘what ought to be’ by providing a |its ultimate objectives & |
|better description of ‘ what is’, |limitations, to use the power & |
|facilitating prediction & providing |mastery over the universe for |
|better technology for a more efficient|well-being rather than |
|use of all available resources. |destruction. |
• Chapra (2000) – Both science & religion serve better mankind by greater cooperation & coordination.
DIFFERENT BETWEEN CONVERSITIONAL & ISLAMIC
1) Objectives providing the info.
|Islamic |Conversational |
|Enable users to |Efficiently allocate|
|ensure Islamic org |scare resources |
|abide by the |available to their |
|principles of |most efficient uses.|
|Shariah in its | |
|dealings. | |
• In other words, Islamic vs. conversional by having to adhere certain Shariah principles & rules.
- Try to achieve certain socio-economic obj. encouraged by Islam.
2) Types of information identified, ways to measures & valued, measures & recorded.
|Islamic |Conversational |
|Identifying |Identify socio-eco &|
|economic events & |religious events |
|transaction. |transaction. |
|Use historical data|Current valuation |
|(asset & |(calculation of |
|liability). |zakat). |
|Required diff |Is focus on profits.|
|statement. | |
3) Users.
|Islamic |Conversational |
|Elite group of |Serves the whole |
|financiers. |gamut. |
|Eg: | |
SIMILIRATIES BETWEEN CONVERTIONAL & ISLAMIC
Provide information to business.
DEFINITION
Islamic Acctg.
i) Acctg. Process – provided appropriate info to stakeholders. Enable them to ensure comp. is operating within Islamic syariah.
ii) Tools- enable Muslims evaluate their accountabilities to God.
Convertional
- Identification, recording, classification, interpreting & communication economic events to permit users to make informed decisions.
Chapter 2: ISLAMIC ACCOUNTING – PRIMER
You May Also Find These Documents Helpful
-
1. Welch Company purchased a put option on Reese common shares on January 7, 2010 for $215. The put option is for 300 shares, and the strike price is $51. The option expires on July 31, 2010. On March 31, 2010, the market value of Reese stock was $48 per share and the time value of the option was $120. The put option is not designated as a hedge. If the company has to prepare financial statements on March 31, 2010, what would the entry be? A debit to the Put Option and a…
- 702 Words
- 3 Pages
Good Essays -
Is it possible to make an egg bounce? That was the question I asked myself. Is it really possible? An egg seems to be too fragile to do that, but after researching the internet, I have found that some interesting experiments and science fair projects that can easily be done with eggs from the refrigerator. Eggs are not only a source of protein or a part of a delicious breakfast, but eggs can also be used in various science experiments.…
- 937 Words
- 4 Pages
Good Essays -
PROBLEM 8-18 Cash Budget with Supporting Schedules; Changing Assumptions [LO2, L O4, L O8] Refer to the data for Janus Products, Inc., in Problem 8-17. The company's president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows: 1. Sales continue to be 20% for cash and 80% on credit. However, credit sales from July, August, and September are collected over a three-month period with 25% collected in the month of sale, 60% collected in the month following sale, and 15% in the second month following sale. Credit sales from May and June are collected during the third quarter using the collection percentages specified in Problem 817. 2. T he company maintains its ending inventory levels for July, August, and September at 25% of the cost of merchandise to be sold in the following month. The merchandise inventory at June 30 remains $18,000 and accounts payable for inventory purchases at June 30 remains $11,700. All other information from Problem 8-17 that is not referred to above remains the same. Required: 1. Using the president's new assumptions in (1) above, prepare a schedule of expected cash collections for July, August, and September and for the quarter in total. 2. Using the president's new assumptions in (2) above, prepare the following for merchandise inventory: a. A merchandise purchases budget for July, August, and September. b. A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total. 3. Using the president's new assumptions, prepare a cash budget for July, August, September, and for the quarter in total. 4. Prepare a brief memorandum for the president explaining how his revised assumptions affect the cash budget.…
- 697 Words
- 3 Pages
Good Essays -
Use the following information to perform the calculations below (using the indirect method). Clearly label the amount of each answer as positive or negative and show all your calculations.…
- 661 Words
- 3 Pages
Good Essays -
The Henry Furniture Co. is a new company and has numerous fixed assets that need to be depreciated. You can help Henry by determining the depreciation rates for the assets and the amount of depreciation for year one. The assets were purchased at various times during the year (hint: watch out for the dates). The following assets will be held by the company for at least the next two years (In other words, year two will be a full year for all of the assets). Please fill in the blanks below.…
- 400 Words
- 2 Pages
Satisfactory Essays -
Item # 3 speaks about the services provided by audit firms to their audit clients,…
- 813 Words
- 4 Pages
Good Essays -
Student life does not generally afford a great deal of free time to pursue your personal interests; however, at one point, you may have considered turning a personal interest or hobby into an official enterprise. Today, you have finally decided to turn that hobby into a business but have realized that you need start- up capital from a lender or investor.…
- 1229 Words
- 5 Pages
Good Essays -
Social accounting is not an organised, wholly coherent area or activity. It is wide-ranging, organic and disjointed. At times, it can be contradictory, confusing and divergent. It can be either trivial or profound, conservative or radical.…
- 2254 Words
- 10 Pages
Powerful Essays -
| What was the average annual rate of return on 3-month U.S. Treasury bills during the period 1984 to 2008?…
- 816 Words
- 4 Pages
Satisfactory Essays -
D. To provide information on both the costs and benefits of looking after products and services.…
- 8272 Words
- 34 Pages
Satisfactory Essays -
Differences in legal systems used in various countries have been cited as one reason for diversity in accounting practice. What are the major types of legal systems?…
- 2520 Words
- 14 Pages
Satisfactory Essays -
You just turned 35 years old and you are looking to save for retirement. You are planning on making yearly deposits starting next year for the next 30 years (a total of 30 annual deposits with the first deposit occurring on your 36th birthday and the last deposit on your 65th birthday). One year after you make your last deposit, you will begin making withdrawals to fund your living expenses. Since your current yearly expenses are $45,000, you expect that you will need $45,000 per year in real terms when you retire. You plan to withdraw funds over 20 years (the first withdrawal you will make will be as of your 66th birthday and last withdrawal will be on your 85th birthday for a total of 20 withdrawals). After the last withdrawal, you do not want any money left over in your retirement account. The interest rate in nominal terms is 9% and the inflation rate is 4%.…
- 284 Words
- 2 Pages
Satisfactory Essays -
Good Housekeeping and other “home and shelter”magazines.- $50,000 for travel costs to visit trade shows and to make sales calls on retailersConsidering the Place, I think, Trap-Ease can be also distributed through supermarkets (likeWal-Mart and others), because housewives often visit these kinds of supermarkets. Other itemsof marketing mix, in my opinion, can be remained the same.…
- 519 Words
- 3 Pages
Satisfactory Essays -
Some scholars in Islamic economics argued that the concept of time value of money is a key to the door or riba which is prohibited in Islam. However, some scholars are of the opinion that time value of money is a concept valid in Islamic economics. What are your opinions on this issue?…
- 963 Words
- 4 Pages
Good Essays -
The current article “IMF programs: Who is chosen and what are the effects?” by Robert J. Barro, Jong-Wha Lee talks about the lending policies and practices of IMF which responds to economic conditions but are also sensitive to political-economy variables. Paper says that all developing countries have received IMF financial support at least once since 1970 with few exceptions including Botswana, Iraq, Malaysia, and Kuwait (Robert J. Barro, Jong-Wha, 2005) but the real question is why so many countries are sorting out financial assistance from IMF? and are these loans are really helpful for their economy? It further explains the determination and effects of IMF program on the country’s economic growth because it invokes a controversy among the claim of IMF which is to contribute the sustainable growth in the economy of its member countries and the calculations made from the current data of 130 countries which show that a higher loan participation reduces the economic growth plus a little indirect effects on other economic and political variables like investment, inflation, government consumption, international openness, the rule of law and democracy(Robert J. Barro, Jong-Wha,2005) which will lead us to investigate the importance of institutional and geopolitical influences in IMF program, approval and participation. From the results of this research paper we can say that IMF lending may be bad for the economy but good for the governments and individual politicians who arrange the lending. Second, the IMF lending may lower real GDP but raise a country’s income, which is augmented by the subsidy element of an IMF program. Third, IMF lending may lower growth in the short run but raise growth in the long run (Robert J. Barro, Jong-Wha, 2005).…
- 1463 Words
- 6 Pages
Powerful Essays