Zakat Accounting for Business: A Case of Medan City, Indonesia

Abstract

The aim of this paper is to analyze the zakat accounting for business as practised among zakat payers (muzakkī) in Medan city, Indonesia. Generally most of the corporate in Indonesia using working capital method in assessing zakat for business. The problems is, what accounting methods adopted by muzakkī in Medan city? This is because if the working capital method is applied, then zakat could be imposed as long as working capital is positive even if the corporate suffered a loss and vice versa. The question is, what is the accounting method practiced among muzakkī in Medan City? To obtain primary data, structured interviews were carried out among selected muzakkī who paid zakat to Badan Amil Zakat National in Medan, Indonesia. The findings showed that first; most of the business muzakkīs in Medan used the profit method for their business zakat as it is more practical. Second, there is still inconsistency in recognized income, allowable operation expenses, and current assets subject to zakat and current liabilities to be exempted from zakat for the assessment of zakat.