A Basic Comprehensive Accounting Package for Musharakah: Consolidation of Islamic and Conventional Practices

  • Umar Habibu Umar
Part of the Management for Professionals book series (MANAGPROF)


The current popular and universal accounting standard for the musharakah is Financial Accounting Standard (FAS) No. 4 issued by AAOIFI. However, this standard covers only recognitions, measurements and presentations of events and transactions in the financial statements of Islamic banks (IBs). Thus, this study consolidates conventional accounting practices relevant to partnership, AAOIFI’s FAS No. 4 and the two musharakah standards developed by the Bank Negara Malaysia (BNM), with the view to producing a comprehensive accounting package for the musharakah that conforms to the Shari’ah. Basically, the study establishes that conventional accounts such as capital account, current account, income statement, revaluation account, realization account and cash account could be applied to musharakah with a view to providing a complete set of financial statements in line with the Shari’ah for the benefits of all the partners. But interest on drawings, interest on capital and interest on loan are the financial transactions found to be against the Shari’ah.


Musharakah (partnership) AAOIFI International Accounting Standards (IASs) International Financial Reporting Standards (IFRSs) Bank Negara Malaysia (BNM) 


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© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Umar Habibu Umar
    • 1
  1. 1.Department of AccountingNorthwest UniversityKanoNigeria

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