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accounting in Islamic societies. Emergence of Islamic accounting provides an opportunity to study the factors of emergence and thus investigate within the range of accounting. Formation of Islamic accounting should undergo the harmonization process with International Financial Reporting Standards at the ease to preserve core Islamic value which is consistent with Shari’ah law.

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Some conventional practices are unacceptable under the light of Shari’ah. For example, borrowing or lending with interest, manufacturing alcohol and gambling are prohibited in Islamic law so that interest seems to be prohibited in Islamic accounting.

Arguments are arising within the Islamic perspective toward conventional perspective on accounting concept and practices as below:

Entity theory-

Unacceptable: Khan (1994, p. 9) notes that there is an ethical problem associated with dealing with a company as a separate entity, as the owners are not liable for the company’s debts in the event of insolvency, but have the rights to residual profits

Acceptable: Adnan and Gaffikin (1997), Abdul-Rahman (1996), Attiah (1989), and Shihadah (1987) asymmetry between risk and reward and the possibility of limiting liability were accepted in mudaraba contracts, which in their earliest form were a type of limited partnership.

Going concern-

Unacceptable: Adnan and Gaffikin (1997) reject it on the basis that accepting this concept acknowledges the acceptance that there is something other than God that will live continuously or indefinitely – in this case the firm – which is not acceptable in Islam

Acceptable: Zaid (1995) claims that Islam recognises the concept because continuity is one of the bases on which Muslim life is built. He further argues that Islam emphasises the continuity of business activities because they are the source of zakah, which should be paid every year.

Conservatism-

Unacceptable: Gambling and Karim (1991) argue that adherence to the concept of conservatism would lead to understatement of assets that could be subject to zakat, which leads them to conclude that this concept is not relevant for Islamic financial reporting

Acceptable: Khan (1994) conservatism sometimes contradicts Islamic principles, but in other cases he considers that conservatism in financial reporting helps to maintain public welfare, by restricting over-optimistic valuations and distribution of unearned profits.

Historical Cost-

Unacceptable: Sulaiman(2000) prefer the use of current values rather than historical cost, on the basis that zakah computation requires current values.

Adnan and Gaffikin (1997) criticise the historical cost concept on the basis that it can be misleading in terms of giving out of date indications of value. Misleading accounting is considered to be inconsistent with Islamic values of just dealing in business and society.

Acceptable: Shihadah (1987) sees the concept of tandeed as req本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。