IAAG - Fun Quiz 1 (Introduction)

Which of the following information is incorrect related to AAOIFI:

• AAOIFI is the oldest standard setting body for the Islamic financial industry

• AAOIFI members include central banks, regulatory authorities, financial institutions, accounting & auditing firms and legal firms

• AAOIFI currently has more than 110+ standards

• AAOIFI is headquartered in Bahrain and has a branch in Malaysia

Below are lessons that can be take from the legal foundation of Islamic accounting, surah AlBaqarah verse 282, except:

• Proper, complete and transparent recording of financial and business transactions by responsible accountants are the fundamentals of Islamic accounting

• Written contract is the main requirement for all significant financial and business transactions especially for a debt contract.

• Islamic financial contracts must have at least 2 truthful witnesses to provide a check and balance mechanism, ensure proper accountability, and ensure parties of the contract properly honor their financial obligations.

• All options provided are lessons that can be taken from 2:282

Which of the following is not one of the features of Islamic accounting?

• Compliance with the principles and rules of Shari’ah

• Different Islamic contractual relationships

• Portrayal of financial statements that are completely different from traditional accounting

• Clear distinction of accounting objectives i.e. religious obligation vs commercial obligation

Which is not a standard created by AAOIFI?

• Shariah Governance Standards for IFIs

• Financial Accounting Standards for IFIs

• Auditing Standards for IFIs

• Ethics Standards for IFIs

A unique objective of Islamic Financial Accounting and Reporting is:

• To present entity’s economic resources, obligations and related risks

• To safe guard entity assets and rights of others

• Distinguish prohibited earnings and expenditure

• To provide useful information to make legitimate decisions

Tainted income that is received by Islamic financial institutions would be directed to and reported in which financial statement?

• Statement of Changes in Restricted Investments

• Statement of Sources and Uses of Funds in Zakat and Charity fund

• Statement of Sources and Uses of Funds in the Qard Fund

• Statement of Retained Earnings, or Statement of Changes in Owners’ Equity

Parallel salam in a Salam contract between an Islamic financial institution and its counter part will be included in which financial statement?

• Assets side, Balance sheet

• Liability side, Balance sheet

• Income statement

• Equity side, Balance sheet

Below are the methods that are used in calculating zakat according to FAS 9

• Net Assets Method

• Net Invested Funds Method

• Both A and B are correct

• None of the above methods are correct

If the bank’s Musharaka profits are not settled at the time of Musharaka termination, such profits shall be recorded as _______________ due from/to ________________.

• Payables, partner

• Payables, client

• Receivables, partner

• Receivables, client

Below are correct statements related to FAS 3 on Mudharabah Accounting, except:

• The standard applies when the bank is the provider of capital

• Losses, in case of Mudarib negligence, shall be recognized as a loss born by the capital provider

• It is recognised as Mudharabah financing if capital was paid in cash on the asset side of the balance sheet

• Disclose in the notes if bank has made provisions for decline in value of Mudaraba assets