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The ancient definition of accounting
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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.
Olusegun Wallace, R. 1996. The Development of Accounting Research in the UK. In: Cooke, T. and Nobes, C. eds. 1997. The Development of Accounting in an International Context. London: Routledge, pp. 218-254.
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
The modern Islamic Finance industry is young, its timeline begin only a few decades ago. However, islamic finance is involving rapidly and continues to expend to serve a growing population of muslims as well as conventional.
Focusing on the benefits to the business organisation, this is a very important concept for them to gain their maximum potential profits and the success of the business as a whole.
Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures.
Accounting is often seen as a dense and lifeless field, but is considered by all the life blood of Corporate America. The purpose of accounting is to provide information about an economic substance transaction of a company or organization. Countries around the have become integrated with each other due to transactions involving an exchange between economic substance for a service or good. The parties that have a stake in each transaction must have access to the information necessary for assessing the economic status and performance of the organization that the transaction is progressing through. The hiring process for accounts is rigorous and detailed focus many human
The accounting cycle is a series of steps starting with recording business transactions and leading up to the preparation of financial statements. This financial process demonstrates the purpose of financial accounting–to create useful financial information in the form of general-purpose financial statements. In other words, the sole purpose of recording transactions and keeping track of expenses and revenues is turn this data into meaning financial information by presenting it in the form of a balance sheet, income statement, statement of owner’s equity, and statement of cash flows.
As the world has recently passed through the global financial crisis that begun in 2008 in the USA with the banks’ collapsing, analysts are giving different opinions and making new economic hypothesizes about the origin of, as well as the process of different countries escaped from the crisis. Among all these new “theories”, the case of Islamic banks is interesting in terms of its nature and consequences. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
Islamic finance is governed by the Islamic law (shari’ah) and the sources from Quran and Sunnah. Islamic finance is the financial framework that comprise the activities according to Islamic law that known as Shariah principle. In Islamic law, any activities involved must be prohibiting from riba. Riba means extra or excess interest in payment made by buyer or customer to the seller or bank. Besides riba, Shariah Law also prohibits any transactions that contain gharar (uncertainty) and maysir (gambling). In Islam, any business activities must be clear and based on Quran. For example, Islam prohibit from investing business in unlawful and haram like run business in producing media such as gossip column which are contrary to Islamic values. The sources of Shariah Law is come from Quran, Sunnah, Ijmaa’ and Qiyas. Quran is refer to the words of Allah revealed to Prophet Muhammad s.a.w. Ijmaa’ is the opinion and agreement between Muslim jurisconsults while Qiyas is application and extension of law established by binding authority to a particular case and compare a new case with Divine text with same and common effective cause (illahi). Islamic finance also can be categories into three sections, there are about faith and belief, practice and activities and moralities and ethic. Under practice and activities, it can be divide into two which is ibadat (relationship with God) and mu’amalat (relationship with others human). In mu’amalat, it separate to political, economic and social activities.
Lastly the challenges faced by the Islamic banking is the lack of unity in giving Shariah’s view. Therefor, it gives problem to the agencies as there are different methodologies that are being proposed when elaborating the law. In order to counter this challenges, agencies need to take initiatives of choosing the view which is parallel or nearly parallel with what was underlined by the Al-Quran and As- Sunnah.
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.
Accounting analysis refers to the accounting information provided by accounting, the application of certain analytical methods, the business process and its business results of quantitative and qualitative analysis. The result of accounting analysis is the main basis for accounting forecasting and accounting examination.
Accounting aids the government and organisations in decision making for their financial stability. This numerical data helps solve real life problems and contributes to how the economy and businesses perform.
Accounting is a vital element of business. It records the way a business has grown and, after analyzing figures, suggests the way it should go in the future. Furtunes are gambled on the advice of accountants.
The function of accounting information system transforms from simple storage to a supportive tool of decision-making, producing high quality information and detailed analysis, bringing about real economic benefits. However, it also challenges the skills and ethics of modern accountants, putting forward the new demand for the professionals who use the accounting information system. As a result, two capabilities are recognized to be essential for the professionals. One is the competency, it lists out a pattern of knowledge used in the job as well as be aware of the link between information systems and decision-making. On the other hand is the ability of analyzing and diagnosing, which is good at problem solving. Another challenge is about ethical issue, requiring integrity and confidentiality as a professional quality of an accountant. To conclude, the accounting information system integrating the information, analyzing and supporting decision-making will become more important in the forming of a company’s strategy. Understanding the structure of accounting information system would lead to a competitive advantage over competitors in the