Accounting methods that accurately reflect income and expenses are satisfactory for income tax reporting purposes. The ___________of accounting is most widely used by farmers.
Answer: cash method.
A listing of all property owned and money owed is called
A listing of all property owned and money owed is called
Answer: net worth statement.
An appropriate use for short
An appropriate use for short
Answer: term credit would be to - purchase fertilizer and seed.
Suppose that the government passed a law setting the maximum interest rate that could be charged to agricultural producers by commercial banks at 5%. A likely result would be that
Suppose that the government passed a law setting the maximum interest rate that could be charged to agricultural producers by commercial banks at 5%. A likely result would be that
Answer: commercial banks would not make loans to farmers
A producer most often uses a cash flow statement to
A producer most often uses a cash flow statement to
Answer: estimate the amount of credit needed and when it will be needed.
A plan that projects expected returns and costs is called a
A plan that projects expected returns and costs is called a
Answer: budget
The total quantity of goods and services produced is called
The total quantity of goods and services produced is called
Answer: supply
All of the following are said to be inelastic with regard to demand except
All of the following are said to be inelastic with regard to demand except
Answer: pork
Speculators in the futures market
Speculators in the futures market
Answer: accept the price risk the hedgers are seeking to avoid.
Hedgers and speculators in the futures market are different in that
Hedgers and speculators in the futures market are different in that
Answer: speculators do not produce a product to sell
The process of using futures contracts for forward pricing is called
The process of using futures contracts for forward pricing is called
Answer: hedging.
A business is solvent if
A business is solvent if
Answer: total assets exceed total liabilities
______ is a means of shifting risk of uncertain events, at a cost, from you to someone else specializing in taking risks.
______ is a means of shifting risk of uncertain events, at a cost, from you to someone else specializing in taking risks.
Answer: Insurance
____ is the act of lending money at an excessive or unlawfully high rate of interest.
____ is the act of lending money at an excessive or unlawfully high rate of interest.
Answer: Usury
When a piece of equipment such as a combine or a truck, has declined in value over its useful life, it has
When a piece of equipment such as a combine or a truck, has declined in value over its useful life, it has
Answer: depreciated.
If you make a mistake when filling out a check, you should
If you make a mistake when filling out a check, you should
Answer: destroy the check and write a new one
Which of the following is not a characteristic of a cooperative?
Which of the following is not a characteristic of a cooperative?
Answer: They emphasize high profits.
______ is a measure of how sensitive the market is to a change in one of the parts.
______ is a measure of how sensitive the market is to a change in one of the parts.
Answer: Elasticity
Jim has a good reputation as a rancher and maintains good fences. During a storm one night a tree fell across his fence and one of his cows wandered out into the road and was hit by a car. The driver was not injured, but the cow died and there was considerable damage to the car. Who was responsible for the car repair and the cost of the cow?
Jim has a good reputation as a rancher and maintains good fences. During a storm one night a tree fell across his fence and one of his cows wandered out into the road and was hit by a car. The driver was not injured, but the cow died and there was considerable damage to the car. Who was responsible for the car repair and the cost of the cow?
Answer: Neither is responsible; it is a "no fault" accident
When a banker asks a person to pledge land, his truck, and livestock to obtain a loan, this property is referred to as
When a banker asks a person to pledge land, his truck, and livestock to obtain a loan, this property is referred to as
Answer: collateral.
As a cooperative member, your share in the profits the cooperative made are distributed to you on the
As a cooperative member, your share in the profits the cooperative made are distributed to you on the
Answer: basis of patronage
One way government might influence the production of certain products or commodities would be to
One way government might influence the production of certain products or commodities would be to
Answer: loan money at low interest rates to producers.
Joe is a U.S. apple producer, all his factors of production have remained constant over the last two years, however, suddenly U.S. apple production has soared, with production factors still remaining constant, Joe can expect apple prices to
Joe is a U.S. apple producer, all his factors of production have remained constant over the last two years, however, suddenly U.S. apple production has soared, with production factors still remaining constant, Joe can expect apple prices to
Answer: fall.
A Georgia cotton farmer might anticipate an increase in the demand for U.S. cotton by the following event
A Georgia cotton farmer might anticipate an increase in the demand for U.S. cotton by the following event
Answer: a near total cotton crop failure in China and Russia
Storage of a product has the following effects
Storage of a product has the following effects
Answer: stabilizes price and regulates supply
Fixed costs in the operation of an agricultural production business would include
Fixed costs in the operation of an agricultural production business would include
Answer: taxes, depreciation, interest and insurance.
One of Sarah's greenhouse customers injured his back when he fell into an open ditch in the greenhouse. The judge said, "Sarah, you failed to use ordinary care in providing for your customers' safety. You are guilty of _____________. I hope you have ____ insurance."
One of Sarah's greenhouse customers injured his back when he fell into an open ditch in the greenhouse. The judge said, "Sarah, you failed to use ordinary care in providing for your customers' safety. You are guilty of _____________. I hope you have ____ insurance."
Answer: negligence, liability
A document that shows the exact size, location, ownership, and method of ownership of property is a
A document that shows the exact size, location, ownership, and method of ownership of property is a
Answer: deed
Which items are least readily converted into cash without loss?
Which items are least readily converted into cash without loss?
Answer: fixed or long term assets
A pork producer who does not produce this year will lose some money including _____.
A pork producer who does not produce this year will lose some money including _____.
Answer: depreciation
If a tractor purchased in 1987 for $12,000 is valued at $14,000 today, then it has
If a tractor purchased in 1987 for $12,000 is valued at $14,000 today, then it has
Answer: appreciated
If all other factors remain the same and the supply of a product goes up, then the price of that product will probably
If all other factors remain the same and the supply of a product goes up, then the price of that product will probably
Answer: fall.
Mr. Brown is the owner of the local hardware store. He does not farm but likes to buy and sell in the futures market. He is a
Mr. Brown is the owner of the local hardware store. He does not farm but likes to buy and sell in the futures market. He is a
Answer: speculator
With which method of record keeping is it easiest to determine the net farm income and analyze the strong and weak points of an agricultural business from year to year?
With which method of record keeping is it easiest to determine the net farm income and analyze the strong and weak points of an agricultural business from year to year?
Answer: accrual method
Ann knows that she will need $100,000 for living expenses when she retires in 20 years. She used _________ to determine how much she needs to invest today at 10% interest to accumulate the needed funds.
Ann knows that she will need $100,000 for living expenses when she retires in 20 years. She used _________ to determine how much she needs to invest today at 10% interest to accumulate the needed funds.
Answer: discounting
Which is not true about the value of money?
Which is not true about the value of money?
Answer: One dollar received today is worth less than a dollar received next year
There are three kinds of budgets. Which of the following listings has them ranked from the most to least comprehensive?
There are three kinds of budgets. Which of the following listings has them ranked from the most to least comprehensive?
Answer: whole farm, enterprise, partial
A list of the critical financial statements does not include the
A list of the critical financial statements does not include the
Answer: bank statement.
From which of the following businesses or business types would you expect to receive a patronage refund?
From which of the following businesses or business types would you expect to receive a patronage refund?
Answer: cooperative
The point where an additional unit of a variable cost item decreases the actual out
The point where an additional unit of a variable cost item decreases the actual out
Answer: put of an enterprise is called the point of - diminishing returns
When the price of a product goes down (assuming no change in other factors)
When the price of a product goes down (assuming no change in other factors)
Answer: less product is supplied.
Which of the following market structures best describes the market in which an American wheat farmer operates?
Which of the following market structures best describes the market in which an American wheat farmer operates?
Answer: perfect competition
Hedging does all the following except
Hedging does all the following except
Answer: guarantees a profit to the producer
The size of farms in the U.S. is
The size of farms in the U.S. is
Answer: increasing
Signing a contract to produce a product at a set price is done to
Signing a contract to produce a product at a set price is done to
Answer: reduce risk.
A document that lists projected income and expenses is a
A document that lists projected income and expenses is a
Answer: budget.
Vern sued his boss, Wilber Wilt, because he fell through a hole in the storage room floor and broke his leg. The judge found Wilber guilty because the hole had been there for months and two other people had also hurt themselves by falling in the hole. The judge said, "You failed to take ordinary care to protect your worker. In other words I find you guilty of _________."
Vern sued his boss, Wilber Wilt, because he fell through a hole in the storage room floor and broke his leg. The judge found Wilber guilty because the hole had been there for months and two other people had also hurt themselves by falling in the hole. The judge said, "You failed to take ordinary care to protect your worker. In other words I find you guilty of _________."
Answer: negligence
Joe needs some cash to operate his greenhouses. He owes $12,000 to a mortgage company on his property but it is worth $300,000. Since the $12,000 loan is at 3.5% and current rates are at 13%, he does not want to give that loan up. How can he borrow money against his property?
Joe needs some cash to operate his greenhouses. He owes $12,000 to a mortgage company on his property but it is worth $300,000. Since the $12,000 loan is at 3.5% and current rates are at 13%, he does not want to give that loan up. How can he borrow money against his property?
Answer: with a second mortgage
Which items are most readily converted into cash without loss?
Which items are most readily converted into cash without loss?
Answer: current assets
Rod made $31,518 profit on his nursery operation last year. His capital investment was $204,545. What was his rate of return to capital invested?
Rod made $31,518 profit on his nursery operation last year. His capital investment was $204,545. What was his rate of return to capital invested?
Answer: 15.41%
The ___________ method of accounting is most widely used by farmers.
The ___________ method of accounting is most widely used by farmers.
Answer: cash
Partial budgets help analyze
Partial budgets help analyze
Answer: changes within enterprise budgets.
Another name for forward pricing with futures contracts is
Another name for forward pricing with futures contracts is
Answer: hedging
All of the following are said to be elastic with regard to demand except
All of the following are said to be elastic with regard to demand except
Answer: salt.
Larry has hedged his peanut crop. If he makes the predicted yield and his costs do not change he will
Larry has hedged his peanut crop. If he makes the predicted yield and his costs do not change he will
Answer: make almost exactly what he predicted no matter how low or how high the price goes.
John owes Sue $1000 for grass seed but he wants to pay her in 6 months. She said, "that's fine, but the bill will be $1060 in six months." John hit the roof but he agreed when Sue explained the _________ to him.
John owes Sue $1000 for grass seed but he wants to pay her in 6 months. She said, "that's fine, but the bill will be $1060 in six months." John hit the roof but he agreed when Sue explained the _________ to him.
Answer: time value of money
The principle components of an agricultural commodity option include
The principle components of an agricultural commodity option include
Answer: premium price, underlying futures price, strike price, short-term interest rate and expiration date.
Borrowing money is a good way to increase _________.
Borrowing money is a good way to increase _________.
Answer: leverage.
A business owned and managed by one person is called (a) _____.
A business owned and managed by one person is called (a) _____.
Answer: sole proprietorship
When a banker asks a person to pledge his land, livestock or similar property to obtain a loan, this property is referred to as
When a banker asks a person to pledge his land, livestock or similar property to obtain a loan, this property is referred to as
Answer: collateral
Other things being equal, a decrease in the amount of an agricultural commodity offered for sale will result in
Other things being equal, a decrease in the amount of an agricultural commodity offered for sale will result in
Answer: a higher price.
The decline in value of an asset over its useful life associated with use, age and obsolescence is known as
The decline in value of an asset over its useful life associated with use, age and obsolescence is known as
Answer: depreciation.
The excess of returns over expenditures is known as _________.
The excess of returns over expenditures is known as _________.
Answer: profit
A document that shows the exact size, location, ownership and method of ownership of property is called a __________.
A document that shows the exact size, location, ownership and method of ownership of property is called a __________.
Answer: Deed
A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is a ___________.
A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is a ___________.
Answer: cooperative
A market situation where one large company owns the complete manufacturing or producing process and controls prices and supply at will is called a ______________.
A market situation where one large company owns the complete manufacturing or producing process and controls prices and supply at will is called a ______________.
Answer: None of the answers listed
A physical count of all assets in a business, usually done once every year for income tax purposes or continuously to monitor available assets. It is called a (n) ______________.
A physical count of all assets in a business, usually done once every year for income tax purposes or continuously to monitor available assets. It is called a (n) ______________.
Answer: inventory
No matter what enterprise is undertaken, _____________ must be paid. It does not vary with the level of production in the short run.
No matter what enterprise is undertaken, _____________ must be paid. It does not vary with the level of production in the short run.
Answer: fixed costs
The Smiths custom harvest wheat. They are considering adding custom harvesting of corn to their business. They need to study a(n) _____________ budget in making their decision?
The Smiths custom harvest wheat. They are considering adding custom harvesting of corn to their business. They need to study a(n) _____________ budget in making their decision?
Answer: partial
A business is said to be ________ if total assets exceed total liabilities.
A business is said to be ________ if total assets exceed total liabilities.
Answer: solvent
Which of the following statements is correct about the law of demand?
Which of the following statements is correct about the law of demand?
Answer: Low price = more quantity demanded
Intermediate liabilities include
Intermediate liabilities include
Answer: a mortgage on equipment.
One example of a current asset is (a) ________.
One example of a current asset is (a) ________.
Answer: inventory held for sale
When figuring the Net Worth of a business the correct formula to use is _______________.
When figuring the Net Worth of a business the correct formula to use is _______________.
Answer: Net Worth = Assets - Liabilities
What is a line of credit?
What is a line of credit?
Answer: It is when a borrower obtains the right to borrow up to some set amount. It can be borrowed all at once or periodically as needed.
What type credit would be needed to purchase inputs for producing commodities which will be sold within the next year?
What type credit would be needed to purchase inputs for producing commodities which will be sold within the next year?
Answer: short-term
What is not a specific purpose of a cash flow analysis?
What is not a specific purpose of a cash flow analysis?
Answer: determine the profitability of a particular operation or enterprise
Which of these does a profit and loss statement not accomplish?
Which of these does a profit and loss statement not accomplish?
Answer: details cash flow problems
When a loan is secured, it means that
When a loan is secured, it means that
Answer: the borrower has put up property worth as much or more than the principle of the loan.
What is another term used to describe a balance sheet?
What is another term used to describe a balance sheet?
Answer: net worth statement
All debt obligations are ____________.
All debt obligations are ____________.
Answer: liabilities
An agricultural manager should have goals and objectives established for the efficient operation of a business. What is an advantage of setting goals?
An agricultural manager should have goals and objectives established for the efficient operation of a business. What is an advantage of setting goals?
Answer: goals show where you are going -- provides a "road map" and gives direction to the business
The income that could have been received if the input had been used in its most profitable alternative use is called
The income that could have been received if the input had been used in its most profitable alternative use is called
Answer: opportunity cost.
Most farm businesses in the U.S. with sales over $25,000 per year are
Most farm businesses in the U.S. with sales over $25,000 per year are
Answer: sole proprietorships.
The coordination of activities that are involved with the moving of a commodity from the producer to the ultimate consumer is referred to as
The coordination of activities that are involved with the moving of a commodity from the producer to the ultimate consumer is referred to as
Answer: marketing.
Which of the following is NOT a type of budget used by farmers and ranchers?
Which of the following is NOT a type of budget used by farmers and ranchers?
Answer: sample budget
What are the four (4) parts of production?
What are the four (4) parts of production?
Answer: management, land, labor, capital
Which of the following current ratios would indicate the highest degree of solvency? (Current Assets/Current Liabilities)
Which of the following current ratios would indicate the highest degree of solvency? (Current Assets/Current Liabilities)
Answer: 4.56:1
A historical record of monthly cash inflows and outflows for a farm/ranch for a specified period of time, usually a year, is referred to as a(n)
A historical record of monthly cash inflows and outflows for a farm/ranch for a specified period of time, usually a year, is referred to as a(n)
Answer: cash flow summary.
The document which is used to study the growth of a farm over time is a(n)
The document which is used to study the growth of a farm over time is a(n)
Answer: balance sheet (net worth statement).
What type of insurance protects the farmer from lawsuits if he/she causes personal injury or property damage to another person?
What type of insurance protects the farmer from lawsuits if he/she causes personal injury or property damage to another person?
Answer: liability insurance
A net worth statement shows the financial condition of a business at a definite point in time. It is also known by several other names. Which of the following is NOT one of the names a net worth statement is known as?
A net worth statement shows the financial condition of a business at a definite point in time. It is also known by several other names. Which of the following is NOT one of the names a net worth statement is known as?
Answer: cash flow statement
A grower asks your assistance in marketing alternatives for his corn crop. He could currently sell the corn for $2.50 per bushel. He believes that in 4 months the price will be $2.60. If he sold the corn now, he could invest the money at 11 percent interest. He is paying 1.5 cents per month per bushel for storage. What should he do?
A grower asks your assistance in marketing alternatives for his corn crop. He could currently sell the corn for $2.50 per bushel. He believes that in 4 months the price will be $2.60. If he sold the corn now, he could invest the money at 11 percent interest. He is paying 1.5 cents per month per bushel for storage. What should he do?
Answer: sell now
A physical account of all assets in a business is called a(n)
A physical account of all assets in a business is called a(n)
Answer: inventory.
The producer who uses forward contracts or hedges is
The producer who uses forward contracts or hedges is
Answer: trying to eliminate price uncertainty.
A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is called a
A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is called a
Answer: cooperative.
The purpose of insurance is to
The purpose of insurance is to
Answer: reduce risk and uncertainty
By diversifying crop enterprises rather than specializing in one major crop, a producer will
By diversifying crop enterprises rather than specializing in one major crop, a producer will
Answer: reduce risk and uncertainty.
A decline in value of an asset over its useful life associated with use, age and obsolescence is known as
A decline in value of an asset over its useful life associated with use, age and obsolescence is known as
Answer: depreciation.
Items that are most marketable and are readily converted into cash without loss.
Items that are most marketable and are readily converted into cash without loss.
Answer: current assets
James made $20,518 profit on his operation last year. His capital investment was $204,545. What was his rate of return to capital invested?
James made $20,518 profit on his operation last year. His capital investment was $204,545. What was his rate of return to capital invested?
Answer: 10%
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