Accounting And Islamic Accounting

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Recommended: The ancient definition of accounting

Definition of Accounting:
The accounting process refers to reporting, analyzing and summarizing transactions in order to prepare financial statements to the stockholders or creditors in order to help them to invest in an organization.

The increasing demand of new accounting process that recognize the Islamic financial transactions, Islamic accounting has been established besides the covenantal accounting.

The most common type of accounting processes is the covenantal accounting. Covenantal accounting refers to "the systematic and comprehensive recording of financial transactions pertaining to a business". (Investopedia, 2014). This type of accounting process pays attention for profit maximization.

The most important issue for every organization is to maximize profit and get benefit from their business. Nowadays, companies care of the customer's satisfaction and loyalty too. However. An organization would provide the users with many services that are contributing profit to them.
Islamic Accounting:
The second type of accounting process is the Islamic accounting. Islamic accounting refers to the accounting process which provides to investors and creditors the proper information needed in order to enable them to ensure that their organization is operated according to Sha'riah and Islamic law. In other word; Islamic accounting means recording, classifying, summarizing and reporting the organization's transactions in an Islamic way. This type of accounting process considers the profit as a sharing between the company and its users in many ways. These ways include Mudaraba and Murabaha. As the sha'ria concept is allow profit from trading transaction but prohibiting interest on it. This refers to Qura'an verses of "
"وَأَحَلَّ ال...

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... the Bahraini citizens are Muslims and Bahrain has a global organizations and financial institutions but they have lack of Islamic accounting in their commercial transactions because of their citizens' luck of knowledge about the Islamic processes in accounting, and the

University of Bahrain is one of the common and stronger educational institutions in the Middle East which has graduated many of the qualified students. However, till now it lacks of opening a specified major in Islamic accounting in order to send and implement the meaning of Islamic process for the students. This paper request the University of Bahrain to pay attention to this important issue especially at the growing needs of certified Islamic accountant who will contribute positively on Bahrain financial industry that recognize Islamic institutions as a major contribute to Bahrain economy.

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