CHAPTER 3Adjusting Islamic Accounting Records at the Close of the Accounting Period

Chapter 2 dealt with recording transactions as the transactions take place in time. This chapter will deal with all the adjustments that must be made to produce a true Islamic picture of the results of the accounting entity for the accounting period and its wealth at the accounting date.

Trade and commerce are encouraged in Islam. Many verses in the Quran promote honest trade and business activities. People are encouraged to work toward respectful living for their families and support others less fortunate through charitable donations. This can be done through business and trading activities that result in reasonable profits. The generation of profits is, however, not done at the expense of, or through the exploitation of, others, and the welfare of the community is promoted over the rights of the owners of the business.

Companies prepare their financial reports or statements at the end of the accounting period to serve different purposes, including ...

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