Abstract
Purpose - This paper aims to argue that the methodologies adopted by the conventional management accounting in selecting between or among two or more alternative courses of action, both in the long-term and the short-term decision making endeavours conflict with the overall objective (falah) of Islamic enterprises.
Design/methodology/approach - The paper explores relevant literatures (including the Qur'an and the Hadeeth) to ascertain the objective of an Islamic enterprise and suggest an alternative approach, in making a choice among alternative courses of action, that aligns with the Islamic socio- economic objective (falah).
Findings - The paper suggests that both in long-term and short-term decision making endeavours, cost-benefit comparison (where cost includes negative externalities) rather than discounted cashflow techniques or contribution margin should be adopted in making a final choice among alternatives to achieve falah.
Research limitations/implications - The paper has not considered other objectives that may be pursued by an organisation beside profit maximization whether short-term or long-term.
Practical implications - The paper expands the frontiers of knowledge in Islamic accounting by exposing the inadequacy of the conventional management accounting decision making methods.
Originality/value - This paper explores the Islamic perspective of the conventional management accounting which is rare among scholars of accounting.