Question 1

**Section A**

Crescent Infrastructure is seeking Sharia-compliant financing for a new toll road project. They are considering a contract where one party provides the capital and the other provides the expertise and management. Profits are shared according to a pre-agreed ratio, but financial losses are borne solely by the capital provider.

Which Islamic finance term describes this specific arrangement?

Accepted Answer

Identify the key characteristics of the contract: one party provides capital, the other provides expertise, and financial losses are borne only by the capital provider. Match this to the definitions of Islamic finance instruments.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing Mudaraba with Musharaka. In Musharaka, all partners contribute capital and share losses in proportion to their capital contributions.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FM — Financial Management Practice Exam 5

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