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Wednesday, November 11, 2009

Profit, Loss and Shares

Q: I am in partnership with another person in a business. Last year we made a loss of R20,000. This year we showed a profit of R20,000. My partner says that he wants his share of the R20,000. According to accounting policy the loss last year cancels the profit, thus none of us get a share. Please explain the Islamic ruling.
A: The Islamic ruling is the same. The amount invested in the business is the capital. The capital will be recuperated first. (Ahsanul fataawa v 6 p 398)

Moulana Naziem Moosagie
Checked and approved by: Mufti Siraj Desai