Distribution of Profit in Mudarabah-Based Investment Accounts — practice questions
توزيع الربح في الحسابات الاستثمارية على أساس المضاربة
Sample questions from the AAOIFI Test question bank on Shari'ah Standard No. 40. Pick an answer to check it and read the explanation.
Sample questions
Under Shari’ah Standard No. (40), who bears losses on unrestricted investment accounts in the absence of transgression, negligence or breach by the Institution?
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Correct answer: B. Clauses 2/1/1 and 2/1/2: In both unrestricted and restricted investment accounts, the account holders and the Institution share profit, if any, in the agreed ratios, while the account holders bear all losses in proportion to their shares in the capital, except losses arising from the Institution’s transgression, negligence or breach of contract, which the Institution bears. Clause 2/2/2 confirms that the Institution does not guarantee investment accounts.
A customer opens a ‘savings account’ whose terms do not authorise the Institution to invest the funds for the customer’s benefit. The Institution uses the funds freely in its own operations. How is the account treated?
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Correct answer: D. Clauses 2/2/1 to 2/2/3: Current accounts are loans that the Institution must repay on demand without increment; it may use and invest them for its own benefit and responsibility. Investment accounts are held on a trust basis and are not guaranteed except for transgression, negligence or breach. Savings accounts that carry no authorisation to invest for the holders’ benefit are subject to the rulings on current accounts, whereas those carrying such authorisation are subject to the rulings on investment accounts.
Which of the following fees may an Institution charge in connection with investment accounts?
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Correct answer: A. Clauses 2/2/4 and 2/2/5: The Institution may charge a fee for opening an investment account, which should be a lump sum, preferably not exceeding the average actual cost, charged once at opening. It may also charge a fee for transporting, storing and counting coins or notes deposited over the counter, but this does not extend to amounts transferred to the Institution’s account. Clause 2/2/6 adds that constructive possession suffices in transfers between accounts.
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