Islamic Financial Instruments: Accounting of Charitable Contracts
This chapter discusses the accounting and financial accounting treatment of charity-based Islamic financial instruments. The charity-based contracts category includes the Islamic finance principles of Takaful (cooperative financial arrangement) and Waqf (endowment). This chapter builds on the influencing theories and the Islamic worldview about money and accounting that I discussed in earlier chapters to formulate the practical aspects of the Islamic accounting system regarding charity-based instruments. In that respect I analyse here the accounting treatment and financial reporting of the fourth and final category of the Islamic finance principles; the charity-based financial instruments in Islamic finance and its important aspects that make it different to the other categories; namely the contracts of exchange.
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