Financial Accounting

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Q1. Aloka Innovative Business Solutions Pvt. Ltd, an HR outsourcing
company based in Hyderabad provides temporary staff to ABC Management College,
Hyderabad. The company entered into following transactions with ABC Management
College and the hired employee. The company would provide an employee for the
college at Rs.30000 per month. ABC Management College prepaid the amount for
the period January to June 2015 in December 2014. The financial year for the
company ends in December. Aloka pays salary of Rs. 20,000 to the employee one
month late as per contract with the employee. How do you record the above
transactions in the books of Aloka in the months of December and January?
Conclude what are the benefits of the term of contracts they have entered with
the two parties. (10 Marks)

Q2. Rocket Singh Software Ltd. and Aerodynamics Software Ltd. are two
leading software companies based in Hyderabad. Rohit a fundamental analyst
working with Ace Financials wants to choose one company where he can invest
based on the data given about the company. Rohit believes that liquidity will
dry in the short run and hence there is going to be lack of funds in the
future. Suggest Rohit where he should invest?

Particular	Rocket Singh Software Ltd	Aerodynamics Software Ltd
Net Profit Margin	13%	12%
Asset Turnover	1.5	2.0
Financial Leverage	2	1.5

(10 Marks)

3. Chandana Brothers, is a chain of retail store located in Hyderabad.
The company bought dress material worth Rs.10,00,000 from Pantaloon in March
2013 on credit basis and made the payment in April 2013. The accounting year
for the companies, starts from 1st April and ends at 31st March every year.

a. How would the transaction impact the Income Statement and Balance
Sheet of Chandana Brothers as on year end date? (5 Marks)

b. How would the above transaction impact the income statement and
balance sheet of Pantaloon as on year end date? (5 Marks)