FAR658: Zakat Accounting Topic 2 - Zakat System and Principles
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Questions and Answers

According to the Hadith narrated by Al-Khudri, what is the minimum number of camels on which Zakat is applicable?

  • Ten camels
  • Three camels
  • Twenty camels
  • Five camels (correct)

What is the purpose of Nisab in Zakat calculation?

  • To determine the amount of Zakat to be paid
  • To exempt certain types of wealth from Zakat
  • To distinguish between rich and poor (correct)
  • To calculate the lunar year

When does the counting of Zakat start?

  • When the wealth is acquired
  • When the amount of money exceeds the Nisab (correct)
  • When the lunar year begins
  • When the Zakat is due

Which type of wealth is exempt from Zakat according to the text?

<p>Agriculture and fruits (A)</p> Signup and view all the answers

What is the basis of Zakat calculation?

<p>Lunar year (B)</p> Signup and view all the answers

What is the issue with the amount of five 'awsuq' mentioned in the Hadith?

<p>It is not clear what exactly five 'awsuq' is (B)</p> Signup and view all the answers

When should the Nisab be assessed according to the Hanafi opinion?

<p>During the whole year of haul (A)</p> Signup and view all the answers

What is the difference between the two major opinions on when to assess Nisab?

<p>One opinion is based on the whole year of haul and the other on the end of the haul (D)</p> Signup and view all the answers

What is the purpose of the Hadith narrated by Al-Khudri?

<p>To specify the minimum amount of wealth on which Zakat is applicable (C)</p> Signup and view all the answers

Which of the following types of wealth is not exempt from Zakat?

<p>Employment income (A)</p> Signup and view all the answers

Flashcards

Zakat Obligation

A mandatory form of charity in Islam, payable by Muslims who meet specific wealth thresholds.

Zakat Exempt

Children and the insane are not responsible for paying Zakat, as the obligation is linked to wealth, not the person.

Zakat on Non-Muslims

Zakat is not payable by non-Muslims unless they convert to Islam. They will not be asked for Zakat for their time of disbelief.

Zakat Base

The total wealth, or assets, that must reach a specific threshold before Zakat is collected.

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Zakat Calculation

The process of determining the appropriate amount of Zakat due, based on the current wealth, and adherence to religious rules.

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Zakat Statements

Recorded reports summarizing the calculations and distributions of Zakat.

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Zakat Beneficiaries

The specific groups of people listed in Islamic teachings to receive the Zakat.

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Zakat-Liable Assets

Certain types of material wealth which are subject to paying the Zakat tax, including gold, silver, agricultural products, livestock, and business assets.

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Nisab

The minimum threshold of wealth or assets that one must possess to be obligated to pay Zakat (determined by Islamic teachings).

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Lunar Year (Haul)

The lunar year cycle used for calculating Zakat (i.e. time required for the Zakat to accrue).

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Study Notes

Conditions of Zakat Obligations

  • Zakat is only obligatory on Muslims
  • Zakat is not waived on children or insane as it is a financial worship obligatory on wealth, not on the individual
  • Zakat is not obliged on non-Muslims until they revert and will not be asked for any Zakat for the period of disbelief

Principles of Zakat Accounting

  • Determining the Zakat Base
  • Calculating the Due amount of Zakat
  • Preparing Zakat Statements and Reports
  • Distributing Due Zakat amongst its beneficiaries

Mal (Wealth) Liable to Zakat

  • Gold and Silver
  • Agricultural produce
  • Wealth extracted from the earth (Minerals)
  • Livestock such as camels, cows, and sheep
  • Money, gold or silver used as cash business assets and as savings
  • Crops and fruits, especially basic foods such as wheat, barley, dates, and raisin
  • Treasures hidden underground by ancients and minerals stored by Allah inside and on the surface of the earth
  • Income derived from exploited assets
  • Employment income of an individual
  • Financial securities such as shares, bonds, sukuk, etc.
  • Business wealth of Islamic financial institutions

Limits of Exemption (Nisab)

  • Hadith narrated by Al-Khudri, the Prophet (PBUH) said: "There is no Zakat on less than five camels, and there is no Zakat on less than five Awaq (of silver) and there is no Zakat on less than five Awsuq (measure of grains)"
  • Issues: How much is exactly five "awsuq" and would the amount be applicable to all grains and seeds irrespective of their categories and value

The Yearly Term (Haul)

  • Zakat is calculated according to the lunar year
  • Nisab can also distinguish between the rich and the poor
  • Counting starts when the amount of money attains the Nisab (the minimum amount on which Zakat should be paid)
  • This includes all kinds of Zakat except Zakat on agriculture, fruits, mineral assets, and Rikaz (metals found in the earth)

Zakat Beneficiaries

  • The poor among them
  • The Prophet (PBUH) said: "Take Zakat from them and do not take the best of their possessions"

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Test your knowledge of Zakat accounting principles, including the conditions of Zakat obligations, Mal (Wealth) liable to Zakat, limits of exemption, and Zakat beneficiaries. Understand the rules and regulations of Zakat in Islam.

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