Separate Business Entities: Conventional and Islamic
Separate Business Entity – Conventional And Islamic.
Nazrin KB Bismillah Ar-Rahman Ar-Rahim
The manner of this short essay is that it will discuss my findings regarding the generally accepted accounting concepts and principles a.k.a. the GAAPs that most accountants and professional accountancy bodies worldwide have, in unison, established to be the essence of the most ordinary way of businesses treating their everyday activities within the scope of accounting. All businesses do have in their rights the ability of creating their own method of dealings with their own personal accounting treatment, but they should, in some degree, declare the reasons as to why they opted out for using the normally accepted accounting treatments. In light of that, I will then try to comprehend what have most Islamic scholars and jurists have their say in this topic, whether or not this particular GAAP is within the Syariah of Islam.
The topic in discussion is the conventional ‘Separate Business Entity Concept’. Before going any further, some clarifications ought to be pronounced. There are two ambiguities here as to how most common students and of those that are illiterate in accounting in general have mistakenly understood by this concept. It is only fair that I state these two because I myself was initially intertwined with both of the ambiguities. I will start by articulating the most basic understanding of the concept. Accordingly, owners and their business are two very distinct character or entities; meaning that you cannot count Mr J and J Enterprise to be of one entity or body. What this concept further implies is that Mr J and J Enterprise is of the relationship of a debtor and a creditor; meaning that initially, Mr J had injected his own personal money into J Enterprise to start the business namely the capital, and J Enterprise should therefore treat Mr J as if it owes Mr J money. Throughout the course of an accounting period, Mr J can rightfully take from J Enterprises
Nazrin KB Bismillah Ar-Rahman Ar-Rahim
The manner of this short essay is that it will discuss my findings regarding the generally accepted accounting concepts and principles a.k.a. the GAAPs that most accountants and professional accountancy bodies worldwide have, in unison, established to be the essence of the most ordinary way of businesses treating their everyday activities within the scope of accounting. All businesses do have in their rights the ability of creating their own method of dealings with their own personal accounting treatment, but they should, in some degree, declare the reasons as to why they opted out for using the normally accepted accounting treatments. In light of that, I will then try to comprehend what have most Islamic scholars and jurists have their say in this topic, whether or not this particular GAAP is within the Syariah of Islam.
The topic in discussion is the conventional ‘Separate Business Entity Concept’. Before going any further, some clarifications ought to be pronounced. There are two ambiguities here as to how most common students and of those that are illiterate in accounting in general have mistakenly understood by this concept. It is only fair that I state these two because I myself was initially intertwined with both of the ambiguities. I will start by articulating the most basic understanding of the concept. Accordingly, owners and their business are two very distinct character or entities; meaning that you cannot count Mr J and J Enterprise to be of one entity or body. What this concept further implies is that Mr J and J Enterprise is of the relationship of a debtor and a creditor; meaning that initially, Mr J had injected his own personal money into J Enterprise to start the business namely the capital, and J Enterprise should therefore treat Mr J as if it owes Mr J money. Throughout the course of an accounting period, Mr J can rightfully take from J Enterprises
References: : * http://www.central-mosque.com/fiqh/limliability.htm * http://fullpaperumtas2012.umt.edu.my/files/2012/07/BE17-POSTER-PP-358-366.pdf * http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1062&context=ijbf&sei-redir=1&referer=http%3A%2F%2Fwww.google.com.my%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3Dseparate%2Bentity%2Bconcept%2Bislamic%26source%3Dweb%26cd%3D4%26ved%3D0CDgQFjAD%26url%3Dhttp%253A%252F%252Fepublications.bond.edu.au%252Fcgi%252Fviewcontent.cgi%253Farticle%253D1062%2526context%253Dijbf%26ei%3D8FOnUM_oNsTOrQfP44GgCg%26usg%3DAFQjCNHzCrqqOzhFf9FkXcwU13EulgUyZA%26sig2%3D0nBYGJiggqSnlndyFPHFzg%26cad%3Drja#search=%22separate%20entity%20concept%20islamic%22 * http://www.helium.com/items/2294879-business-entity-concept