Economics and Business

Course Outline: Islamic Accounting

Prof. Dr. Md Jahirul Hoque
Head, Dept of Business Administration, IIU Chittagong, Dhaka Campus                              

Afzal Ahmad   
Lecturer, IIU Chittagong, Dhaka Campus  
                                          
Paper presented at a Follow-up Workshop on Curriculum Reform
9 November, 2008, Dhaka University


Course Objective

The main objective of the Islamic accounting course is to acquaint the students, teachers and other readers with the principles, concepts, constraints, methods & techniques of accounting in accordance with Islamic principles & Shariah. Islamic Accounting course is important especially in case of Islamic banks, Insurance Companies, other organizations & institutions which operate according to Islamic Principles & Shariah. In absence of Islamic Accounting System, the vision & mission of the various Islamic organizations & institutions will be meaningless. Hence, Islamic Accounting system is a must for those organizations & institutions. Accounting under Islamic perspective would also enable the readers to understand the supremacy of Islamic Accounting over conventional accounting system. Moreover, Islamic Accounting system would help fixing responsibility &accountability of the functional managers & other executives while fixing responsibility is the core of Islamic principles. In Islam, responsibility & accountability are the main theme. We the human beings are responsible and accountable to the almighty Allah, our creator. 

Course curriculum

  1. Introduction
     Concept & significance of Accounting
     Objectives of Accounting
     Classification of Accounting
     Accounting principles, concepts & constraints, Traditional vs Islamic
  2. Accounting Data & Information
     Concepts of Accounting data & information 
     Sources of data & information
     Users of Accounting Data & information 
     Role of Accounting data & information in Managerial decisions
  3. Business Transactions & Accounts
     Concept & features of Business Transactions: Business transaction permissible in Islam.
     Types of accounts
     Recording business transactions
     Classification (Ledger Accounts)
     Trail Balance 
     Accounting Cycle VS Cash cycle
  4. Preparation of Financial Statement under Islamic Perspective
     Preparation of Work sheet
     Preparation of Income Statement 
     Preparation of Balance Sheet
     Preparation of Cash Flow Statement
  5. Accounting Ethics & Standard
     Accounting Ethics in accordance with Islamic principle
     Islamic Accounting Standards VS Traditional Standards
  6. Accounting for Depreciation, Reserve & Provisions
     Concepts of Depreciation, Reserve & Provisions
     What for Depreciation, Reserve & provision
     Methods of providing Depreciation
  7. Hire Purchase & Installment Accounting
     Concepts of hire Purchase & Installment: permissibility of Hire Purchase & Installment in Islam.
     Distinction between Hire Purchase & Installment from accounting view point 
     Hire Purchase Accounting under Islamic principles
     Installment Accounting under Islamic principles
  8. Corporate Accounting
     Issue of Stock & Share: Permissibility of Stock & Share in Islam
     Preparation of Final Accounts under Islamic Principles
     Accounting for Bonus Stock
  9. Accounting Reporting & Disclosure System
     Concepts & significance 
     AIS vs FIS & MIS 
     Attributes of a good Accounting Reporting & Disclosure system
     Inclusion of environmental data & information in Accounting Report
     Accounting Report & Disclosure in Corporate Firms under Islamic principles
  10. Bank & Insurance Accounts
     Preparation of Bank Accounts under Islamic principles
     Preparation of Insurance Account under Islamic principles
  11. Responsibility Accounting
     Concepts of Responsibility Accounting & Significance from the view point of Islam.
     Responsibility Centers
     Segmented Financial Statements
     Return on Investment from the viewpoints of profit margin& assets turnover
     Role of Residual Income-ROI

  12. Tax & Zakat Accounting
     Tax Principles & Types under Islamic principles
     Preparation of accounting for tax purposes
     Preparation of Tax Return for Corporate Firms
     Objectives & Principles of Zakat 
     Determining  Zakatable Income
     Payment of Zakat

References:

  1. Accounting, Philosophy, Ethics and Principles by M, Zahurul Islam
    2.  AL- Zakah: A Handbook of Zakah Administration by Md. Zahurul Islam
    3.  The third International Zakah ConferenceVol. 7  Num. 2 P-279, AJISS   Muhammad Arif 
    4.  Business and Accounting Ethics in Islam Vol. 9  Num. 3 P-418-419, AJISS By Trevor Gambling and Rifaat Ahmed Abdel  Karim,
    Reviewed by Muhammad Akram Kham
    5.  on Islamic Accounting: Its Future Impact on Western Accounting  Vol. 11  Num. 1 P-120-121, AJISS By Toshikaxy Hayashi, Reviewed by Muhammad  Akram Khan
    6.  Darrat,  Ali  F. “ Are Checking Accounting in American Banks Permissible Under Islamic Law?
    7.  Tomkins, Cyril and Rifat Ahmed `Abdel karim. “The Sahriah and Its Implications for Islamic Financial Analysis:  An Opportunity to Study Interactions among Society, Organizations and Accounting “4: 1/101  AJISS
    8.  Al- Badawi,  Mohamed H. and Sultan. M. al-sultan “Net Working Capital versus Net Owners Equity Approaches to Computing Zakatable Amount:  A Conceptual Comparison and Applications. 9:1./69 AJISS
    9.  Sulaiman,  Maliah & Roger Willet. ‘’Islam, Economic Rationalism and Accounting’’   18: 2/61 AJISS
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