AAEC 3980 Quiz Compilation

t/f A business is insolvent when assets exceed liabilities.

false *solvent*

QUIZ 2 t/f The role of marketing is to bridge the gap between the conflicting needs of producers and consumers by completing the production process.

true

Autonomous profit centers: a) All of the other answer choices are correct b) Keep work units small enough that people have a sense of involvement and achievement c) Can be accomplished with minimum numbers of management levels d) Offer fast performance feedback e) Put people in charge of their own destiny

A - all answers

Average product is:

AP = Y/X

The controls in the controlling function of management should:

Measure progress toward goals and alert management to serious deviations

The main objective of the directing function of management is to:

Motivate and lead employees to accomplish the firm's purpose and objectives via the other three functions of management

There are six steps in the decision-making process, which of the following is not one:

None of the other answer choices are correct. (answers were: analyze alternatives, follow up, implement decision, identify problem)

The following types of budgets are related to each other:

Operating, cash flow, and capital expenditures budgets

The four Ps of marketing in the marketing mix are:

Promotion, Price, Product, Place

The main objective of the planning function of management is to:

Put the firm in the best possible position relative to future business conditions and customer demands

Risk and uncertainty are not

Rare occurrences in agribusiness because of the stability of the industry

The best forecasts are those that:

Relate the impact of macroeconomic variables to changes in a firm's sales and costs

If the seasonal price index number for April is 91.6, what percentage of the average annual price is the price in April during a normal year?

91.6 percent

Capital budgeting investment opportunities occur when:

A depreciable asset needs to be replaced or a cost-reducing/income-increasing investment is adopted

Which of the following is not one of the four cost items that a manager must monitor: a) Break-even analysis b) Competition c) Evaluating efficiency/effectiveness d) Plant size e) Accounts receivable

b

The best investment in capital is the one that provides: a) Positive long-term profit b) The lowest risk c) All of the other answer choices are good indicators of a good capital investment d) Benefits sooner than later e) Highest long-term profit among the alternatives

c

Which of the following is not one of the six revenue items that a manager must monitor: a) Competition b) Changing definition of value c) Plant size d) Keeping customers aware of products e) Changing customer needs

c

The control function of management is expressed in seven steps, which of the following is not one of them: a) Identify and implement corrective actions b) Develop a management information system c) Develop a written business plan d) Identify financial performance criteria e) Determine targets for financial performance measures

c - develop written business plan

The following are all examples of data that go into calculating the initial investment of a capital asset, except: a) Borrowed funds b) Freight installation c) Operating expenses of the asset d) Acquisition cost e) Salvage value of replaced asset

c - operating expenses of the asset

Depreciation is a) Tax deductible b) The funds that need to be set aside in order to replace the asset being depreciated c) All of the other answer choices are true statements about depreciation d) An accounting procedure by which the purchase cost of an asset is prorated over its useful life e) A non-cash expense

c) All of the other answer choices are true statements about depreciation

The following are true of leases, except: a) An operating lease has charges based on use (monthly, weekly, etc.) b) Leasing is often beneficial to start-up businesses who do not have excess capital on hand to invest in new equipment c) Lease-with-option-to-purchase has tax-deductible lease payments d) Lease payments are usually less than a down payment if the item was to be purchased e) Lease payments are tax-deductible for basic financial lease

c) Lease-with-option-to-purchase has tax-deductible lease payments

To be at a profitable level of production, the producer must do all of the following in the production process, except: a) Maximize average product b) Maximize output per unit of input c) Maximize marginal product d) Cease when total product is maximized e) Cease when marginal product becomes zero

c) Maximize marginal product

The cash flow budget is composed of these major components except: a) Savings deposits b) New borrowings c) Retained earnings d) Repayment of operating loans e) Savings withdrawals

c) Retained earnings

t/f Internal selling is sales of the firm's products and services to the customer.

false *Internal selling keeps everyone in the business focused on profitably meeting customers' needs*

t/f Selling on purpose occurs when the salesperson persuades a customer to buy more than they needed so they can get a higher commission.

false *Selling on Purpose - helping people feel good about what they bought and about themselves*

t/f The cash flow budget assesses loan repayability and provides information on profitability.

false *assesses loan repayability and info for liquidity management, but NOT profitability*

t/f Marginal product is determined by dividing the change in output by the corresponding level of input or in the equation MP = ∆Y/X.

false *each additional unit produced by adding an additional worker*

t/f The three types of partnerships are general, cooperative, and limited liability.

false *general, limited, limited liability*

QUIZ 6 t/f The payback method in capital budgeting decisions is calculated by dividing the cost of the investment by the useful life of the investment.

false *how much needs to be sold to get the payback on the investment*

t/f The sole proprietorship is the most popular structure because it is easy to form and it limits owners' personal liability in covering debt obligations of the business.

false *increases personal liability*

t/f The purpose of computing a moving average for a price series is to reduce the impact of short-run fluctuations by plotting every single data point.

false *it is useful in finding trends*

t/f The average rate of return is the best method for evaluating a capital budget decision because it uses the time value of money.

false *time value of money is opportunity cost, ARR does not use that*

QUIZ 3 t/f The budgeting process is valuable because the agribusiness manager is required to think clearly through the firm's costs and revenues.

true

QUIZ 4 t/f Critical tasks are activities that must be done well if the business is to achieve its purpose and financial and marketing objectives.

true

QUIZ 5 t/f A manager who wants to prevent stockout and ensure that his business always has products on hand for sale has a good reason to hold inventory.

true

QUIZ 7 t/f Great managers know how to motivate their employees to orderly and collectively maximize the value of their work in accomplishing the firm's purpose and objectives

true

t/f A business organized by business function means that there may be a sales unit, accounting unit, and manufacturing unit and management is more centralized.

true

t/f A business with a debt to equity ratio of 0.69 means that creditors have a relative investment of $0.69 per dollar put up by the owners of the firm and also means that the business is solvent.

true

t/f A firm is economically efficient when they maximize the output per unit of input.

true

t/f A major requirement for successful selling is to listen to the customer and let them define their reasons for buying.

true

t/f Agribusiness management is an art supported by science.

true

t/f All employees are involved in selling a firm's products and services by making sure the right product is at the right price in the right place at the right time.

true

t/f Cycles or cyclical patterns reflect biological lags of approximately four years for hogs and eight to ten years for cattle.

true

t/f Demand is a schedule of how much consumers are willing and able to buy at various prices.

true

t/f Net working capital is current assets minus current liabilities.

true

t/f Profit is maximized when marginal revenue equals marginal cost.

true

t/f Successful managers treat customers the way customers want to be treated.

true

t/f The accounting equation, calculated with data found on the balance sheet, is: Assets = Liabilities + Owners' Equity

true

t/f The agri-food (and fiber) system includes the agribusiness firms that are input suppliers, producers, commodity processors, food manufacturers, food distributors and food retailers.

true

t/f The best salespeople are those who believe passionately in the value of their products and are able to communicate that value effectively to their customers.

true

t/f The equimarginal principle of allocation suggests that firms should always use inputs where they give the greatest return.

true

t/f The long-run success of agribusinesses requires that they be the first choice of their customers, employees, and investors.

true

t/f The long-run success of an agribusiness requires that they be the first choice of their customers, employees, and investors.

true

t/f The principle of diminishing marginal returns teaches managers that just making the operation bigger is not always the way to make it more profitable.

true

t/f The profit and loss statement records revenues earned and expenses incurred for the current accounting period

true

t/f There are three main types of leases: operating, financial and lease-to-purchase.

true

When given a choice, consumers will always select the item that gives them the highest satisfaction because of the economic principle of:

utility maximization

As a manager, dealing with employee performance is critical. In dealing with negative performance, the manager should do all of the following, except: a) Have a written performance evaluation with documentation of where the employee's performance has fallen short from expectations b) Avoid feeling uncomfortable by talking to the employee about their poor performance a peer of the employee tell them their job has been eliminated c) Provide a mentor or additional training to the employee if their performance has suffered because of a lack of motivation or skills d) Provide the employee an opportunity to explain why their performance has fallen short e) Direct the employee to the appropriate services (counseling, behavioral therapy, etc.) if their performance has suffered because of personal issues

B

Which of the following would be part of the business plan: a) A 3-5 year financial plan b) All of the other answer choices are correct c) Evidence of a thorough knowledge of customers d) A good pricing strategy e) Clear statement of the firm's purpose and objective

B- all are correct

The business plan is designed to:

Communicates the purpose and objectives of the firm

Elasticity is: a) %ΔQ ÷ 1%Δ in P or I b) Either elastic, inelastic, or unitary c) The change in quantity demanded relative to changes in prices and income d) All of the answer choices are correct. e) %ΔQ / %ΔP

D - all answers are correct

An agribusiness's purpose and objective should include the following:

Description of how the firm will gain its competitive edge in the marketplace

Consumers consume a variety of goods because of the economic principle of:

Diminishing Marginal Utility

Line personnel are not

Employed in the human resources department of the firm

The participatory style of management:

Involves employees in decision-making and the planning of work objectives.

Decentralized management allows:

Lower level managers to develop decision making skills

If the calculated price elasticity of granola is -1.5, then:

The demand for granola is elastic, Total revenue would go up if the firm decreased the price of granola, Granola is a normal good, For each 1% increase in price, the quantity demanded of granola decreases by 1.5%

Which of the following statements is not true? a) The processing function overcomes the barrier of value separation b) The storage function overcomes the barrier of time separation c) The transportation function overcomes the barrier of time separation d) Buying and selling functions overcome the barrier of ownership separation e) The grades and standards function overcomes the barrier of information separation

The transportation function overcomes the barrier of time separation (C)

The organizing function of management does all of the following, except: Establishes the legal structure of the firm (i.e. sole proprietorship, corporation, partnership, etc.), Covers all the issues surrounding how to set up a business so things are done well (efficiently) and the right things are being done (effectively), Uses forecasting to evaluate both past and current conditions to make prediction of future customer demands and business conditions Enables a business to organize by team, product, or market, Gives employees an identity in the firm and influences how they perceive their work and its contribution toward the go)

Uses forecasting to evaluate both past and current conditions to make prediction of future customer demands and business conditions

Commitment to the golden rules of success results in: a) All of the other answer choices are results of commitment to the golden rules of business success. b) Fully satisfied customers who will buy all they can c) Products that fill customers' needs d) Products that give great value e) Happy and productive employees who give great service

a

Taxes: a) All of the other answer choices are true of taxes b) Have no impact on the discount rate unless 100% of an investment is financed c) When lower, can increase the likelihood of investment in capital assets by the business d) Impact cash flows because interest expense and depreciation are tax deductible

a

Which of the following data are necessary to conduct a capital budget analysis and decision? a) All of the other answer choices are correct b) Terminal value c) Initial investment d) Net cash flows e) Discount rate

a - all choices

Which of the following capital budgeting methods does not use the time value of money? a) Average annual rate of return b) Benefit/Cost ratio c) Amortization method or equivalent annual cost method d) Internal rate of return e) Net present value

a - average rate of return

The internal rate of return method in capital budgeting is: a) A variation on the net present value method b) All of the other answer choices are correct of the internal rate or return method c) The discount rate where NPV equals zero d) The discount rate where the present value of an investment's benefits equal the present value of its costs e) Better than the average rate of return method because it incorporates the time value of money

b - all answers

There are four tools of financial analysis. Which of the following is not one? a) Specific financial performance measures b) Breakeven analysis c) Common-size financial statements d) Comparative financial statements e) Index-number trend series

b - breakeven analysis

The following are examples of corporations, except: a) Non-profit organization b) Registered limited partnership c) Cooperative d) S-corporation e) Limited liability company

b) Registered limited partnership

The pro forma cash flow budget answers the following questions, except: a) When will borrowed money be repaid? b) When will the business management get a pay raise? c) How will borrowed money be repaid? d) When does the business need to borrow money? e) Does the business need to borrow money?

b) When will the business management get a pay raise?

Firms must earn their right to make a profit. Long-run financial success requires that: a) The firm offers products that provide the greatest value b) The firm offers the highest financial return on investment capital c) The firm be the first choice of their customers, employees, and investors d) All of the other answer choices must occur for long-run financial success. e) The firm provides work that gives the greatest employee satisfaction

d

The discount rate is not: a) A firm's required rate of return on its equity capital b) When high, makes it harder for the firm to find acceptable projects c) Affected by taxes unless 100 percent of the investment is financed by debt d) When low, makes it harder for the firm to find acceptable projects e) Important to the long-run financial survival of a firm

d

Which of the following are not one of the nine elements that should be included in a job description for an agribusiness: a) Education and experience b) Job title c) Salary and benefits d) Religious preference e) Location

d

There are five human needs that work can fulfill. Which of the following are not one of those five? a) Physiological needs (food, water, shelter) b) Belonging (acceptance by others) c) Safety (protection from danger and pain) d) Self-fulfillment (be all that you can be) e) Speed (fast and agile)

e

Which of the following is not an asset: a) Cash value of life insurance on key employees b) Accounts receivable c) Cash d) Inventory e) Accounts payable

e - accounts payable

Gross margin is: a) Income remaining to cover operating expenses b) Equivalent to contribution c) Revenue from sales minus cost of goods sold d) What remains after subtracting cost of goods sold from sales revenues e) All of the other answer choices are correct

e - all answers

Inventory impacts profits because: a) Inventory can be subject to shrinkage if perishable b) Inventory has value and/or cost c) Inventory has carrying costs d) Inventory can become obsolete e) All of the other answer choices are correct

e - all correct

Which of the following ratios measure profitability? a) Inventory turn over ratio b) Quick ratio c) Accounts receivable turnover ratio d) Acid test ratio e) Return on investment ratio

e) Return on investment ratio

QUIZ 1 t/f Agribusiness managers need only to be great communicators, motivators and leaders to be successful.

false

t/f A sustainable competitive advantage can come from being either the highest cost provider of a product or by offering a differentiated product.

false

t/f Annual performance reviews are typically not a standard part of a manager's responsibility.

false

t/f Consumer tastes and preferences have become more homogenous and predictable as a result of globalization.

false

t/f Price is the sole component of value as perceived by consumers.

false

t/f The four functions of management are planning, organizing, controlling and deciding.

false

t/f The purpose of calculating the real price from a nominal price series is to eliminate the effects of population from the data.

false

t/f The three major types of budgets are the operating budget, the income statement, and the capital expenditures budget.

false

t/f The world has three constants: Stability, Principles, and Choices.

false

t/f When it comes to the four principles of organizational design, working units need to be all inclusive of everyone in the business from staff and line personnel to junior and senior management.

false

t/f When thinking about the five barriers to consumer satisfaction, the processing function of marketing helps consumers overcome the barrier of ownership separation.

false

t/f When thinking about time value of money, the method of compounding enables managers to answer the question of: "How much money do I need to put into a savings account today to obtain $40,000 in the future?"

false

If the calculated income elasticity of granola is +0.9, then:

granola is a necessity (income elasticity less than 1.0 means it is a necessity)