Ag Business 16-17

Which one is NOT an advantage of farm corporations?

Unlimited liability

Which of the following would not be a way to increase farm income in a low income year?

Use the grain for an FSA non-recourse loan.

______ is the act of lending money at an excessive or unlawfully high rate of interest.

Usury

If a tractor's use is increased from 350 to 500 acres per year its:

Variable cost per acre will decline

For a set of data, which of the items below is a statistical measure of variation?

Variance

For workers employed by Jim and Nancy, they must issue a _____ form.

W2

In budget analysis which of the following is NOT considered one of the four factors of production

Weather

Which of the following should not affect a farmer's decision to store his crop?

What he paid for his grain bin

If a person fails to comply with the terms of a contract, it is known as:

a breach of contract.

A plan for the use of money based on goals and expected income and expenditures is:

a budget

A person who has strong feelings that the market is headed higher is considered ________.

a bull

A company that produces tires and greeting cards is an example of

a conglomerate.

Which of the following statements describe the advantages of a family-farm corporation?

a family corporation avoids personal liability and the liability is limited to the investment in the farm business

A study to determine whether or not a business will be profitable is called:

a feasibility study.

A cost of production which does not vary with level of total production and includes items as depreciation, taxes, insurance, interest on investments is called:

a fixed cost

In analyzing the ongoing farm business, depreciation should be considered as:

a fixed cost

A market where there is a true interaction of supply and demand, and where government interference does not exist is an example of:

a free market.

Other things being equal, a decrease in the amount of an agricultural commodity offered for sale will result in:

a higher price

Other things being equal, a decrease in the amount of an agricultural commodity offered for sale will result in...

a higher price.

A proportional or flat tax will result in

a higher tax paid as a person's income rises.

Riparian rights refers to the rights of:

a land owner with property bordering a stream

A quota is

a limit on quantity of imports crossing the border.

Someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals is

a manager.

When a producer has a position in the futures market and it moves against him, he will get ________.

a margin call

Intermediate liabilities include...

a mortgage on equipment.

Long-term liabilities include ...

a mortgage on real estate

A Georgia cotton farmer might anticipate an increase in the demand for U.S. cotton by the following event

a near total cotton crop failure in China and Russia

Normal profits are

a payment that covers the opportunity cost of entrepreneurship.

A budget is best described as __________ of income and expense

a prediction

A farm budget is...

a prediction of what will happen.

An increase in the supply of an agricultural commodity normally results in

a price decrease.

The minimum wage is an example of

a price floor.

A reduction in the supply of an agricultural commodity, with no change in demand, normally results in:

a price increase

An annuity is:

a retirement plan which pays a constant amount of money each year

In general, if a policy is not thought out and established,

a situation requiring action will arise.

An Enterprise budget is...

a statement of expected returns and costs associated with one production process

Hedging is...

a strategy that decreases price risk through futures market transactions

If the government were to set the price for milk at an artificially high price, what is likely to occur?

a surplus

A tariff is

a tax on imports.

A farmer with limited capital who is in need of temporary life insurance protection should purchase:

a term policy

In developing an enterprise budget, crop insurance should be considered as:

a variable cost.

Bob told the banker that his partner, Justin, had quit their partnership so he was going to make one-half of the truck payment as he usually did, and let the banker collect the other half from Justin. The banker would most likely say,:

"As with any partnership you are individually and collectively responsible for the full amount."

If the Murphy's decide to use the futures market to hedge the price of market cattle to be sold in the future they would initially:

"Sell futures contracts expecting to buy them back when the cattle are

Joe put $2,000 into an IRA during 1985. When he paid his federal income tax for 1985 he paid tax on this IRE contribution.

$0

Amy has 8,000 ten-inch hanging baskets to fill with soil. How much will her per-unit cost of soil be if each bag of soil costs $18 and each bag will fill 62 ten-inch baskets?

$0.29

Ann has 8,000 ten-inch hanging baskets to fill with soil. How much will her per-unit cost of soil be if each bag of soil costs $25 and each bag will fill 49 ten-inch baskets?

$0.51

A feedlot operator purchased 100 feeder steers with an average weight of 700 pounds and sold them at an average weight of 1050 pounds. Total feed cost for the pen was $18,000. Feed cost per pound of gain was equal to:

$0.514

If a $3,000 micro-computer system can be depreciated over three years using the straight line method, what is the depreciation taken for the first year?

$1,000

Jason borrowed $1,000 from the bank at 8% interest. He is to make a lump-sum payment at the end of the year. If simple interest is used, what is the total amount he will pay

$1,080

Kelly borrowed $1000 from the bank at 8% interest. She is to make a lump-sum payment at the end of the year. If simple interest is used, what is the total amount she will pay?

$1,080

Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. How much can demand deposits expand?

$1,800

Which person below needs life insurance the most?

$10,000 Farmer net worth, 32 yrs. old, married, has 4 children under 18 Yrs., has $15,000 tax credit for this year

If grain sorghum has 97% of the feeding value of corn on a pound-for-pound basis and corn is selling for $6.25 per bushel, then a hundredweight of grain sorghum is worth

$10.83

A soybean producer decides to store his soybeans in the local elevator for 6 months. The price at harvest is $11.00 per bushel and the elevator charges 2 cents per bushel per month for storage plus a 5 cents per bushel handling charge. He has 5,000 bushels to sell and must borrow $55,000 at 8% annual interest while he stores the soybeans. What price must he receive for his soybeans to break even and cover his storage and opportunity costs?

$11.61

A farmer purchases 500-pound feeder steers for $1.50 per pound and plans to sell the steers at 750 pounds. The farmer estimates the total cost of gain to be 94 cents per pound. The nearest breakeven price when the steers are sold at 750 pounds is

$131.33/cwt.

Your pal borrows $10.00 in 1984 and agrees to repay you in 3 years at 12% interest compounded annually. How much would he owe you in 1987?

$14.04

Suppose a producer discovers insects in his cotton crop and decides to use an insecticide to save the crop. A bank will loan him $2000 at 9.75 percent interest until he sells his crop 9 months later. At that time he must repay the loan. How much will he pay in interest if simple interest is computed?

$146.25

Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. What is considered excess reserves?

$180

Suppose a producer discovers insects in his cotton and decides to use an insecticide to save the crop. A bank will loan him $2000.00 at 9.5% interest until he sells his crop 12 months later. At that time he must repay the loan. How much will he pay in interest if simple interest is computed?

$190

A friend borrows $2,000 and agrees to repay you at the end of three months. The interest is to be calculated at 12% per year compounded monthly. What is the total amount he/she will owe at repayment time?

$2,60.60

Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. What is considered required reserves

$20

Suppose farmer Johnson buys a new cotton picker for $160,000. It has a useful life of six years and a salvage value of $40,000. What is the annual depreciation using the straight-line method?

$20,000

Suppose farmer Johnson buys a new cotton picker for $160,000. It has a useful life of six years and a salvage value of $40,000. What is the annual depreciation using the straight-line method? "

$20,000

If you deposit $200 in an account that pays 6 percent simple interest per year, which of the following would be the balance in your savings account at the end of the first year?

$212

Johnny was quoted a price of $7.50 for his beans but decided not to sell. He later sold to another buyer at $7.57. With production cost at $6.58 per bushel and 3,500 bushels to sell, how much extra profit did he make by checking with the second buyer?

$245.00

Magruder Farms Inc. presently has current liabilities in the amount of $10,000, intermediate liabilities of $50,000 and long term liabilities of $225,000. In order for the business to be considered solvent, total assets must be greater than ________.

$285,000

If you get $0.20 per bushel above the break even price, what will be your profit on 15,000 bushels?

$30,000

Tom's assets amount to $40,000 and his liabilities are $3,000. What is his net worth?

$37,000

How much will the total soil cost be for Ann's 8,000 hanging baskets?

$4,080

Suppose land prices in John's area are expected to be stable over the next several years and taxes are set at $10 per acre/per year. If John can get a long-term loan at 10% and knows that he can count on a $50 profit per acre, then the maximum he should consider paying for land is about ____ per acre.

$400

Which of the following is an asset?

$400.00 in savings

The nearby hog futures contract closed at $49.80 with a local basis of $1.85. The local cash market was:

$47.95

If you obtain a $5,000 balloon loan for five years and agree to pay interest-only for the period, then you will owe at the end of five years

$5,000

A soybean producer decides to store his beans in the local elevator for six months. The price at harvest is $5.20 per bushel and the elevator charges 1.5 cents per month/per bushel for storage. He has 5,000 bushels to sell and must borrow $26,000 at 10 percent interest for six months while he stores the soybeans. What price must he receive for his soybeans to break even and cover his storage and opportunity costs

$5.55

For 2013, the Section 179 deduction for farm equipment has a maximum amount of ________.

$500,000

At the beginning of last year, you had an outstanding loan for $90,000. The loan carries an interest rate of 12% annual percentage rate. You make one loan payment at the end of the year for $25,400. What is the outstanding balance at the beginning of this year?

$55,000

Scott sold a futures contract in January for November soybeans at $6.35 per bushel. At harvest time he sells his beans at the local market for $8.40 per bushel and buys back his futures contract. The effective price Scott got for his soybeans is about...

$6.35

A farmer should issue an IRS Form 1099 for which of the following?

$650 paid to a neighbor for land rent

If Pam's production cost for cabbage is $3.00 per bag and the price she receives is $5.00 per bag, how much would the price have to be for her to double the profit she makes at $5.00?

$7.00

Suppose John has implicit costs of $10,000, explicit cost of $20,000, and revenues of $100,000. What is his economic profit?

$70,000

At the beginning of last year, you had an outstanding loan for $90,000. The loan carries an interest rate of 12% annual percentage rate. You make one loan payment at the end of the year for $25,400. What is the outstanding balance at the beginning of this year?

$75,400

The carcass weight of a hog usually averages 76% of the live weight at the time of slaughter. If it costs 60 cents per pound to raise a hog to slaughter, what is the breakeven carcass price?

$78.94/cwt.

Suppose a piece of machinery is to have $4500 total depreciation over its lifetime. Using the straight line depreciation method, how much depreciation can be taken off the third year if the machinery has an expected life of 5 years and no salvage value?

$900.00

The present value of $100 that will be received at the end of 1 year, given a 5% interest (discount) rate is:

$95

The formula used to calculate break-even prices to cover total operating costs is ________.

(Price times yield) minus total operating costs = 0

A farmer has total assets of $600,000 of which land is $300,000. The farmer's debt equity ratio is 0.5. What will the farmer's debt equity ratio be if the lender devalues the land by 25%?

.615

An acre equals

0.40 hectares

If a farmer's equity is $400,000 and his liabilities are $250,000 his debt-equity ratio (liability/equity) is:

0.63

You are considering the purchase of a used combine, rather than continuing to hire a custom operator at $22.00 per acre. If you purchase the machine, the annual fixed costs (interest, depreciation, etc.) will be $15,000. The variable cost is $10 per acre including the extra labor. There would be no other changes in costs and returns associated with ownership and no savings other than the custom charges. How many acres must be harvested each year in order to justify (on a breakeven basis) purchasing the combine?

1,250

As a farm manager you want to find your net capital ratio (total assets / total liabilities). You have current liabilities of $58,000 and long term liabilities of $82,000. Your assets equal $210,000. Your net capital ratio would be:

1.5

Which of the following net capital ratios would indicate the greatest degree of solvency? (Total Assets/Total Liabilities)

1.5

A farmer has total assets of $500,000 of which land is $300,000. The farmer's debt : equity ratio is 1.0. What will the farmer's debt : equity ratio be if the lender devalues the land by 30%?

1.56

Which of the following Net Capital Ratios would indicate the best financial position? (Total Assets / Total Liabilities)

1.8

Which of the following is NOT a current liability?

10 year equipment loan

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?

10%

On April 1, 2010, Janice borrowed $10,000 to plant corn. On December 1, 2010, she repaid the $10,000 along with $716.67 interest. What annual interest rate did she pay?

10.75%

How many total acres are included in the "S 1/2 of the NW 1/4 and E 1/2 of the NE 1/4 of the SW 1/4 of Section 15, Twp. 10N, R4W of the 5th Principle Meridian"?

100 acres

For self-employed individuals, what percent of their health insurance premium is deductible?

100%

John Henry made $75,345 profit on his farrow-to-finish operation. His capital investment was $670,450. What was his rate of return to capital invested?

11%

Samuel made $22,470 profit on his operation last year. His capital investment was $200,550. What was his rate of return to capital invested?

11.20%

In general, most farmers making less than $250,000 per year will pay a capital gains rate of ________.

15 percent

Mr. Berry earned $15,000 from farming last year. His farming operations control $150,000 of assets, of which $50,000 are owed (mortgage, operating loans, etc.). What was the rate of return on Mr. Berry's own capital?

15%

A producer's share of each dollar spent for bread and cereals in the United States is about ________.

15.4 cents

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?

15.41%

Average corn yields have historically increased at an annual rate of 2%. If the current average is 150 bushels per acre, what do we expect the average yield will be in 5 years if it continues to grow at this rate?

165.6 bushels

The percentage of agriculture-related jobs in the total workforce is ________.

18

Which of the following Net Capital Ratios would indicate the best financial position? (Total Assets/Total Liabilities

2.8

A farmer would like to determine her liquidity. She has the following data: Current assets equal $178,000 and current liabilities equal $60,000. Her current ratio would equal...

2.97:1

The percentage of total jobs that require a college education to enter the job is ________.

20 percent

The number of careers available to those interested in agriculture number more than ________.

200

The number of workers in agriscience in the United States is approximately ________.

21 million

When Jill sold her crossbred steer she received $1,250. She figured her total expenses to be $975. The percentage net return realized was:

25%

With an amortized loan over 25 years you will pay the lowest amount of the interest during the year?

25th

How many pounds of 48% protein soybean meal must be mixed with 10% protein wheat to make a ton of 15% protein feed?

263 pounds

Sally made $12,479 profit on her operation last year. Her capital investment was $39,550. What was her rate of return to capital invested?

31.55%

Corn yields 90 bushels per acre and has a production cost of $140 per acre. Current market prices are $2.50 per bushel for corn and $6.00 per bushel for soybeans. Soybeans can be raised at a production cost of $110 per acre. At what breakeven yield per acre would soybeans generate the same net return per acre as corn?

32 ½ bushels

Corn yields 90 bushels per acre and has a production cost of $140 per acre. Current market prices are $2.50 per bushel for corn and $5.20 per bushel for soybeans. Soybeans can be raised at a production cost of $110 per acre. At what breakeven yield per acre would soybeans generate the same net return per acre as corn?

37 1/2 bushels

Which of the following current ratios would indicate the highest degree of solvency? (Current Assets/Current Liabilities)

4.56:1

Which of the following is a tax deferred retirement savings plan offered to employees by their employer?

401(k) plan

Under current IRS rules and regulations concerning depreciation, most farm equipment is ...

5 year property

In the futures market for corn and soybeans, one futures contract covers:

5,000 bushels

A farmer's net worth can be _____ million dollars in 2013 before the farmer would have any estate taxes due upon death.

5.25

Joe's total cost for his strawberry operation this year was $800.00. If his gross receipts totaled $2,400.00, what was his percent return to investment?

50

To stimulate the economy in 2013, the Bonus Depreciation Deduction was extended which allows a deduction of _____% of the cost of NEW equipment.

50

At what age will term life insurance cost a person the most?

55 years

Jeff plants corn this year on 98 acres. It costs him $138.00 per acre to grow the corn. If corn brings $2.47 per bushel, how many bushels does he have to produce to break even?

56 bu./acre

Corn has an expected yield of 155 bushels per acre and a production cost of $400.00 per acre. Expected market prices are $6.00 per bushel for corn and $12.00 per bushel for soybeans. Soybeans can be raised at a production cost of $150 per acre. At what breakeven yield per acre would soybeans generate the same net return per acre as corn?

56.7 bushels

If a farmer had total assets of $654.160 and made a profit of $39,249 his return on investment would be...

6%

A farmer who wants a real rate of return on his investment of 5% will use what discount rate if he anticipates inflation of 2% per year?

7%

Of all agriscience jobs, the percentage that is not on farms or ranches is ________.

80 percent

Ellen made $18,419 profit on her operation last year. Her capital investment was $204,550. What was her rate of return to capital invested?

9%

The best format for a budget in our complex economy is:

A formal written plan

A management tool that shows projected costs and net returns associated with some change in the farm business is:

A partial budget

For the rules of depreciation, which of the following is an example of "listed property?"

A passenger car

Suppose a binding price ceiling is placed on gasoline, what is the likely effect?

A shortage

Which of the following is NOT true?

A stray cow becomes the property of the finder after 24 hours.

If the government were to set the price of milk at an artificially high price, what is likely to occur?

A surplus

Suppose a price floor is placed on wheat, what is the likely effect?

A surplus

If the government were to set the price of milk at an artificially high price, what is likely to occur.

A surplus.

The change in the value of wine inventory would be included in which type of income statement?

Accrual adjusted income statement

Inventory changes and changes in the value of prepaid expenses would be used to calculate which of the following?

Accrual adjusted net farm income from operations

Effective tax planning requires all but one of the following:

Accurate estimate of family living expenses

On a crop insurance policy, APH stands for

Actual Production History

Liability of a general partner in a partnership is limited to:

All debts and obligations of the partnership

A factor that will help determine priorities of goals is

All of the answers listed

A good reason for keeping good records is...

All of the answers listed

A price hedge "protects" the producer against...

All of the answers listed

An enterprise budget:

All of the answers listed

An example of a government payment is a(n):

All of the answers listed

An independent contractor is a person or organization performing a job without control from the employer. The employer only determines the results. You, as an employer, have no control over the method used to do the job. Which of the following would be an independent contractor?

All of the answers listed

Budgeting serves as a guide in ...

All of the answers listed

Contracts are ...

All of the answers listed

Contracts are...

All of the answers listed

Employer's responsibilities to employees includes:

All of the answers listed

Examples of records for an income tax return are:

All of the answers listed

For what are accounting methods used?

All of the answers listed

Gene secured a recent loan with his timber land. The lender:

All of the answers listed

Good record keeping system includes:

All of the answers listed

If beef cattle producers are making an unusually high profit, then one might assume...

All of the answers listed

If swine producers are making an unusually high profit then:

All of the answers listed

If the government allowed no immigration to this country and controlled illegal immigration, the effect on agriculture would probably be...

All of the answers listed

James told his agriculture teacher that he was keeping records to satisfy tax filing requirements. His teacher was correct in saying...

All of the answers listed

Leverage:

All of the answers listed

Maynard thinks he really has a no-lose deal this time, so he borrowed money at the current high interest rate to increase his acreage. Which statement is true about his decision?

All of the answers listed

Speculators in the futures market...

All of the answers listed

Supplemental records supply additional information which helps provide a more complete record system. Supplemental records provide:

All of the answers listed

Suppose the price of pork and beef at the supermarket doubles. What is a likely related occurrence?

All of the answers listed

Term debt coverage ratio indicates whether a farm business produces enough cash to cover the current portion of the term debt (farm and non-farm). A projected ratio of less than one (1) indicates that a business may need to:

All of the answers listed

The amount of products that are produced depend on:

All of the answers listed

The balance sheet of a farm should include

All of the answers listed

The figures in a budget are a prediction of income and expenses. These figures are best based on:

All of the answers listed

The financial record that reflects the profitability of the business over an accounting period is a(n):

All of the answers listed

There are several ways of transferring legal ownership of property from one person to another. The most common are:

All of the answers listed

What factor may alter demand for a product when there is not a change in price?

All of the answers listed

What is a lender likely to ask for from a potential borrower?

All of the answers listed

What should be included in the net worth calculation

All of the answers listed

What statement best describes an advantage of a family farm corporation?

All of the answers listed

When gathering data for use in budgets, a source of information might be:

All of the answers listed

Which is an advantage of leasing land over land ownership?

All of the answers listed

Which is true of credit? Credit...

All of the answers listed

Which of the following could be used as collateral?

All of the answers listed

Which of the following is (are) NOT deductible as farm expenses on federal tax returns ?

All of the answers listed

Which of the following is a characteristic of a flexible loan.

All of the answers listed

Which of the following is a variable cost for a swine farmer?

All of the answers listed

Which of the following is true about a limited partnership?

All of the answers listed

Which of the following is true?

All of the answers listed

Which statement is generally true?

All of the answers listed

Why do you want to know how markets cycle?

All of the answers listed

Why is it important to keep accurate records when operating a business?

All of the answers listed

Select the item that is not deductible on Federal Income Tax returns

All of these are deductible

Capital-replacement and term-debt replacement margin is:

Amount of cash remaining after all expenses, family living, income taxes, and scheduled debt payments have been made

The amount of money you have not received at the end of the accounting period for work completed is an example of what time of item?

An account payable

A management tool that shows projected costs and returns associated with one production process, usually for one production period is:

An enterprise budget

If demand and supply increased equally for an agricultural product, the results would be:

An increased quantity will be sold at the same price.

A farmer's income tax should be filed no later than provided he has filed his estimated tax by Jan. 15th.

April 15

An advantage of a farm business structured as a corporation is:

Avoidance of personal liability

Which of the following lists the four basic financial statements?

Balance sheet, income statement, statement of owner equity and statement of cash flow

A loan is one in which only the interest is paid each period until a specified time at which the total principal is due.

Balloon

The difference in the future's price and local price is called:

Basis

When the size of the soybean harvest exceeds locally available farm and elevator storage, what happens to the basis?

Basis widens

Failure to comply with the terms of a contract is known as:

Breach of contract

Who would you go to place a hedge?

Broker

The Murphys have historically forward contracted the price they receive for the crops they have grown. They plan to continue to forward contract, but they would like to obtain the benefits if prices increase. Which of the following alternatives should they consider?

Buy a call option

In theory, how do grain reserves stabilize prices?

By releasing supplies in short production years and absorbing supplies in big production years.

"

C and F

A farm business accounting period for January 1, 2011 to December 31, 2011 would be an example of what type of accounting period?

Calendar year accounting period

The 1040 Schedule F is an example of which type of income statement?

Cash Income Statement

Supplies are paid for during an accounting period but at the end of the accounting period, the supply inventory is larger. This indicates which of the following?

Cash expenses overstate actual expenses for the accounting period.

A contains the financial history of your business transaction for a given time period.

Cash flow summary

Which of the following items would be a farm business expense for an accounting period?

Cash used to purchase livestock feed.

Which of the following items would not be a farm business expense for the accounting period?

Cash used to purchase new machinery

What does marginal cost measure?

Change in total cost to produce another unit of output

A well known market where futures contracts are traded is the:

Chicago Board of Trade.

An increase in the rate of inflation, everything else equal, will have what impact on the present value of a future stream of income?

Decrease the present value

If the strong dollar reduces the demand for U.S. wheat exports, then we can expect the market price for wheat in the United States to:

Decrease.

A document that shows the exact size, location, ownership and method of ownership of property is called a .

Deed

A document that shows the exact size, location, ownership and method of ownership of property is called a __________.

Deed

A document that shows the exact size, location, ownership, and method of ownership of property is a...

Deed

Tax planning falls into which two categories?

Deferral of tax and Savings of tax

Which of the following is NOT an advantage of a fixed price forward contract sale?

Delivery of specified quantity is required

What law is it when the consumer will purchase more only at lower prices?

Demand

Which of the following is considered a fixed cost?

Depreciation

The books and pamphlets available that contain descriptions about jobs are called ________.

Dictionary of Occupational Titles

A measurable point where an increase in the addition of a variable cost item decreases the actual output of an enterprise.

Diminishing returns

The percent change in quantity divided by percent change in price is:

Elasticity

________ is a measure of how sensitive the market is to a change in one of the parts.

Elasticity

A person working in a winery could be classified as an employee, agent or independent contractor. Over which of these does the employer have the most control?

Employee

A person appointed in a will or by the court system to carry out requests and dispose of all property in accordance with the deceased is a:

Executor

A recession caused by too little aggregate demand would require which of the following policies?

Expansionary fiscal policy

If maintenance costs rise for industry, what effect will this have on expected return?

Expected return decreases

Individuals such as Albert Einstein, Edwin Land and Steven Jobs lead through which type of power?

Expert

A spouse who works for the other spouse has to pay social security taxes

FALSE

Accounting profits include the entrepreneur's implicit costs of doing business.

FALSE

An increase in price will result in less quantity demanded for a normal good.

FALSE

At break even, the entrepreneur's normal profit is zero.

FALSE

Businesses do not need to supply consumers with accurate information.

FALSE

By number, most firms are corporations and incorporate to avoid unlimited liability.

FALSE

Compounding calculates the present value of a future sum of money.

FALSE

Efforts to reduce tariffs, taxes, domestic subsidies and other barriers to free trade are not important and do not affect the American farmer.

FALSE

Employers pay twice as much social security and Medicare as their employee's share.

FALSE

Firms in perfect competition have easy entry to the market but face barriers to exit the market.

FALSE

If you invest carefully, you don't have to take risks.

FALSE

If you want to cut your spending, you'll have to start with your fixed expenses.

FALSE

In practice, trade is completely free.

FALSE

Increased demand will result in a decrease in supply.

FALSE

Monopolies will always have economic profits.

FALSE

Monopolistic competition has a monopoly in its market.

FALSE

Monopsonistic firms pay a higher wage than would competitive firms.

FALSE

Most young people do not qualify to use the simplest of the tax forms - 1040EZ.

FALSE

NAFTA requires that tariffs on most goods produced and sold in North America will be gradually increased.

FALSE

Only what you like to do determines the vacation destination you should consider.

FALSE

Sole proprietorships raise financial capital by issuing stocks and bonds.

FALSE

Stocks are a form of debt paid back with interest.

FALSE

The FICA tax that pays for social security is a progressive tax.

FALSE

The Right to Redress makes certain that consumers have a variety of goods and services from which to choose.

FALSE

The United States is the world's smallest exporter, which causes large trade deficits.

FALSE

The outpatient portion of a policy covers treatment after you have been admitted to the hospital.

FALSE

equal increase in demand and supply will always result in an increase in the market price.

FALSE

Monopolies charge the highest price possible.

False

The major source of credit for Georgia farmers for real estate loans is:

Federal Land Bank

Which is not a likely source of funds for short term (less than three years) loans?

Federal land bank

Which of the following describes the oligopoly market structure best?

Few large firms, barriers to entry, mutual interdependence

Of the following which is not an example of a tangible function?

Financing

A farm business accounting period for July 1, 2010 to June 30, 2011 would be an example of what type of accounting period?

Fiscal year accounting period

By using distant banks buyers have the use of your money interest free while checks are in transit. What is this called?

Float

For self-employed persons, the Deduction for Employer-Equivalent portion of the Self-Employment Tax is deducted on ________.

Form 1040

While trying to describe a work problem, one manager utilizes analysis of basic work tasks that are performed in the organization. It is most likely that this manager has studied the work of

Frederick Taylor.

Which of the following items will not be included in the estate of a business owner?

Gifts made more than five years before the date of death

Which is an advantage of land ownership over land leasing?

Greater potential for equity accumulation.

A positive capital-replacement and term-debt replacement margin indicates that the term debt coverage ratio is:

Greater than one

Net Cash Income equals:

Gross Receipts - Total Expenses

If the expected return rises and interest rates remain constant, what happens to investment spending?

Gross investment increases

Monopolistic competition is like a monopoly in that it has which of the following characteristics?

Has a differentiable product

is the buying and selling of commodity futures to protect a grower or producer from extreme price fluctuations in the marketplace at the time the product is sold.

Hedging

There is a significant difference between which of these terms:

Hedging - speculating.

Carol calculated her payment over a 3 year period on a $14,000 piece of equipment as $388.89 per month, including principle and interest. What can be said about Carol's calculations?

Her calculation is wrong, the payment is too low

Which of the following would all decrease supply?

Higher business taxes, higher resource costs, fewer suppliers

A sound estate plan needs to address which of the following items?

How estate taxes will be paid, the transfer of assets and how income taxes will be paid

What does the Production Function indicate for an agriculture producer?

How output responds to input

The formula for calculating simple interest is _______.

I=P X R X T

Assume you are a speculator in corn futures, and that you somehow got information, before it was widespread knowledge, that the acreage of corn planted in the mid-west was down drastically from earlier forecasts. What would be the most profitable use of this information?

Immediately buy futures contracts of corn at the current price.

Which one of the following is an example of farm income?

Income from rental houses.

The 1040 Schedule F would be an example of a statement similar to which of the following?

Income statement

This financial statement makes adjustments to cash receipts and expenses of a farm during a specified time period to arrive at net farm income from operations.

Income statement

A federal deficit will have what effect on the national debt?

Increase it

Expectations of a shortage will have what effect on demand?

Increase it

If wheat and corn are common substitutes as an input into livestock feed, then an increase in the market price for corn is expected to:

Increase the demand for wheat

_______ is a means of shifting risk of uncertain events, at a cost, from you to someone else specializing in taking risks

Insurance

The payment to an insurance company by a policyholder to purchase and maintain an insurance policy

Insurance premium

Which of the following is true?

Investment tax credit is given as an incentive to invest in capital outlay items such as equipment.

Which of the following does not describe perfect competition?

Is a price maker.

Mr. Brown purchased a computer system for use in managing his farm. How much will the depreciation be for the first year. Assume that the computer will be sold at the end of five years for a salvage value of $600

It cannot be determined from the data supplied.

Which of the following is not an advantage of a Cash Flow projection?

It determines long term profitability

What is compound interest?

It lets you make money on interest paid to you.

Which of the following is NOT an advantage of a cash flow projection?

It sets prices you will receive in the future.

The price for peanut butter rises. Assuming the supply for jam is constant, what will happen to the price of jam?

It will decrease.

Which of the following is an advantage of increasing financial leverage?

It's a way to increase returns to equity capital

James co-signed on a loan with his neighbor so that his neighbor could borrow money for a new pick-up. The banker told James and his neighbor that "you are collectively and individually responsible for the loan payment." That means that ...

James will have to pay all the note if his neighbor defaults

Jimmy borrowed 90% of the money to start a business, the Guaranteed multiplying Ant Farm, selling breeding stock. First Federal Bank holds the first mortgage, Shark Loan Company owns the second and his Mother holds the third mortgage. If the business fails who will be the last to receive any of the assets?

Jim

On a dark night a tornado blew down some trees onto John's fence. While John was still asleep, and before daylight, one of John's steers wandered out onto the road and got hit by Hosea's car. The steer was killed and the car was badly damaged. Which statement is correct?

John is not liable for Hosea's car damage and Hosea is probably not liable for the steer

Provides owners with undivided interests and with rights of survivorship

Joint tenancy

Which of the following is considered one of the four factors of production?

Labor

When the price of a product is increased with no change in factors other than price, less product will be purchased. This is the:

Law of Demand.

What are the two economic principles that make up the production function?

Law of diminishing returns AND Law of diminishing physical output

When Joe tells the employees that he is sure they can fulfill the schedule because they are such good and skilled employees, he is performing which of the management functions?"

Leading

Which of the following is true?

Lenders usually require collateral.

What type of insurance protects the farmer from lawsuits if he/she is responsible for personal injury or property damage to another person?

Liability insurance

What type of insurance protects the farmer from lawsuits if they cause personal injury or property damage to another person?

Liability insurance

Entitles a person to receive income from or use of property for his/her life only

Life estate

Which of the following is not a tax law provision that can be used for agriculture producers?

Loan principal as a deductible expense

Which of the following statements is correct about the law of demand?

Low price = more quantity demanded

Which is not a policy plan for multi-peril crop insurance?

Management Protection

Farmers must file and pay their income tax by ________.

March 1

When required, you must send an IRS Form 1099-MISC to IRS before

March 1

The funds deposited with a broker to trade futures contracts is called:

Margin

Which of the following is not one of the basic financial statements?

Monthly bank statement

A decrease in the value of the U.S. dollar relative to other countries currency should:

More costly imports to the U.S.

A farmer or rancher has certain duties toward people that are on their land. The people that are on the farmers or rancher's land can be divided into three groups. Which one of the following is not one of the three groups?

Neighbors

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?

Neither is responsible; it is a "no fault" accident

When figuring the Net Worth of a business the correct formula to use is _______________.

Net Worth = Assets - Liabilities

What value should Shady Lane Vineyard and Winery put on homegrown grapes?

Net selling price (opportunity cost) of homegrown grapes

What is another term used to describe a balance sheet?

Net worth statement

Which of the following gives the best measure of financial progress over a period of years?

Net worth statement

Dane has a herd of Angus cows. One rainy night a driver runs into the fence and then drives away leaving the fence broken. One of the Angus cows wanders out on the road. Another car driven by Christy hits the cow. The cow dies and Christy's car is damaged. Who is responsible?

No one is at fault

Dane has a herd of Angus cows. One rainy night a driver runs into the fence and then drives away leaving the fence broken. One of the Angus cows wanders out on the road. Another car driven by Christy hits the cow. The cow dies and Christy=s car is damaged. Who is responsible?

No ones at fault

A market situation where one large company owns the complete manufacturing or producing process and controls prices and supply at will is called a ______________.

None of the answers listed

A tractor costing $32,000 is purchased. The assumed life is 7 years, and salvage value is established at $4,000. If $4,000 depreciation is taken each year, the method of depreciation is .

None of the answers listed

For an amortized loan, the amount of interest in the first payment will be

None of the answers listed

If Sarah contracts in March to deliver he corn crop she is about to plant for $7.00 per bushel next November, what can be said is absolutely true of her transaction if projected production costs total $3.45 per bushel based on 200 bu. yield?

None of the answers listed

If a producer has gross sales of $1,000,000, then it can be said that . . .

None of the answers listed

Johns current ratio of assets to liabilities is 2:1. One thing this means is that....

None of the answers listed

The general increase in price reducing the value of money is known as ____.

None of the answers listed

Which is not a good reason for good business records?

None of the answers listed

Which of the following is true about term life insurance?

None of the answers listed

Which of the following items will increase the net worth of a farmer?

None of the answers listed

The United States, Canada, and Mexico agreed to eliminate tariffs on most goods produced and sold in North America by the year 2009. This signed agreement is ____.

North American Free Trade Agreement (NAFTA)

Which of the following was enacted to provide safety in the workplace by eliminating or reducing potentially hazardous conditions?

Occupational Safety and Health Act

The President of the United States just announced a grain embargo against the Soviet Union. Ira has 40,000 bushels of corn in storage, his most likely reaction to this news is...

Oh no, I just lost money

A market in which there are a few producers of very similar products, such as automotive manufacturers, is an example of which of the following?

Oligopoly

Which is not true about the value of money?

One dollar received today is worth less than a dollar received next year

Which best describes the monopoly market structure?

One firm, unique product, barrier to entry

Which best describes sole proprietorship?

One owner, unlimited liability, owner does most of the management

An agriculture producer learns what from the Production Function?

Output response to an input

is used to record income and expenses that cannot be attributed directly to an enterprise at the time incurred.

Overhead enterprise

The formula for measuring price elasticity is:

Percentage change in quantity/ Percentage change in price

Which of the following statements is true about family-farm corporations?

Personal liability is limited to the investment in the business.

What are the three parts of total utility?

Place, Form, Time

A supply curve shows the relationship between quantity supplied and

Price

As supply decreases and demand decreases, what effect does this have on equilibrium price and quantity?

Price indeterminant, quantity decreases

Suppose that the supply curve shifts right. What is the most likely effect on price and quantity?

Price will decrease and quantity will increase

Select the item that is NOT deductible on Federal Income Tax returns

Principle paid on debt.

Which item is not a tax deductible expense?

Principle payment for the family car

Select the item that is NOT deductible on Federal Income Tax returns.

Principle payments on loans

Jason has a fixed cost of $2 and a projected variable cost of $.50 per bag of cabbage. The best price he can contract for a week before planting time is $2.25 a bag and it is too late to shift to another enterprise. Unfortunately, the projected price over the next few years is no better. What is your advise to Jason?

Produce this year -- look for another crop for next season.

What are the five stages, in order, in a complete "Production-Marketing System?"

Producing, Processing, Wholesaling, Retailing, Consuming

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 9 percent interest. He is paying 1.5 cents per month per bushel for storage. What should he do?

Sell now

Which method of accounting is considered the easiest?

Single entry accounting

____________ is a type of accounting system.

Single-entry

John worked for a building contractor during the summer and his monthly check stub showed $61.00 deducted for FICA. This deduction was for:

Social Security tax

The most common form of business arrangement in the U.S. is:

Sole Proprietorship

__________ are any constituencies in the organization's external environment that are affected by the organization's decisions and actions.

Stakeholders

If a person does not have a will at the time of death, the disbursement of the person's assets will be guided by ________.

State statutes

This financial statement lists cash receipts and expenses of a farm during a specified time period.

Statement of cash flow

If the price increases on a product with a perfectly inelastic demand, what will happen to quantity demanded?

Stays the same

Suppose crude oil prices rise, what is the likely effect on gasoline a product made from crude oil?

Supply of gasoline decreases

A cover letter should encourage the employer to read your resume and increase your chances for obtaining an interview.

TRUE

Banks usually send reports of your checking account activity each month describing the activity on your account.

TRUE

Careful evaluation of alternatives is the best way to get the most from your money.

TRUE

Dieting taken to a dangerous extreme is an eating disorder that could threaten your life.

TRUE

Fixed costs occur no matter what or how much product is produced.

TRUE

If an employee is paid wages of $2,500 during the year, the employer is required to pay social security tax for that employee.

TRUE

If you cannot resolve problems with your job performance, it is best to resign before your employer fires you.

TRUE

In partnerships, each partner is liable for the partnership debts of his or her partner.

TRUE

It is financially more beneficial to save your money in a bank rather than let the government withhold more taxes than you think you will owe for the year.

TRUE

Perfect competition results in long-run market outcomes that are efficient.

TRUE

Prices ration scarce resources and products.

TRUE

Stage 3 of production begins when the marginal product (M.P.) becomes zero.

TRUE

Sums of money paid or received in periodic payments for a specific period of time are annuities.

TRUE

The Department of Defense was the first to use the Internet.

TRUE

The difference in the interest charged by banks on loans and the interest paid on money deposited is the bank's income.

TRUE

The goals you set affect your family, future family, and community.

TRUE

The price of a product when it is new on the market is usually the highest it will ever be.

TRUE

The process of searching for the equilibrium or market clearing price is called price discovery

TRUE

When a price ceiling is imposed at a level below the equilibrium price, this creates a shortage.

TRUE

You are only liable for personal injuries if you intentionally inflict them on a trespasser.

TRUE

Provides owners with undivided interest and with rights of survivorship but does not allow for conveyance without consent of the other party involved

Tenancy by entirety

Provides owners with undivided interest with no rights of survivorship but with rights to convey, mortgage and otherwise care for as is available through fee simple ownership.

Tenancy in Common

What is the Law of Supply?

The higher the price, the higher the quantity supplied will be

If we want to consider the time value of money in considering alternative farm investments, we should choose the investment with:

The highest net present value.

Bill knows that corn yield peaks at about 150 bushels with approximately 125 units of fertilizer in his county. He also knows he can produce 25 bushels of corn without fertilizer. With this information, Bill knows that:

anything more than 125 units of fertilizer would be wasted

If a tractor purchased in 1987 for $12,000 is valued at $14,000 today, then it has...

appreciated

If a tractor purchased in 1987 for $12,000 is valued at $14,000 today, then it has...

appreciated.

An increase in the value of a piece of real estate is ____.

appreciation

Hedgers and speculators in the futures market are similar in that they

are both interested in making a profit

Hedgers ...

are seeking to reduce their risk

Hedgers ...

are seeking to reduce their risk.

Barriers to entry mean long-run economic profits

are sometimes greater than zero.

Individual agricultural producers are described as "price takers" because:

as individuals, they have very little power to influence prices.

The property and other resources owned and controlled by a business are:

assets

A business is "solvent" if total:

assets exceed the total liabilities.

A business is said to be solvent if total ...

assets exceed total liabilities

A business is said to be solvent if total:

assets exceed total liabilities.

The Net Worth Statement or Balance Sheet shows the financial condition of a business ________.

at a particular point in time

Which of the following would be most elastic with regard to demand?

automobiles

If a tractor's use is increased from 300 to 400 acres per year its . . .

average fixed cost per acre will decline

There are two economic principles that make up the Production Function. What are they?

The law of diminishing returns and The law of diminishing physical output

If the owners of a ranch do not develop a will, the property they own at the time of death will be distributed using which procedure?

The laws of dissent for the state of residence

Suppose a producer has just enough acreage to justify the tractor he has purchased. Why would he want to do custom work for his neighbor? So that his:

average fixed cost per acre will decline.

Lynn has hedged his soybeans based on predicted production of 50 bushels per acre. He also contracted to purchase all his materials, supplies, and other inputs at a good price to produce the crop. Under which of the following conditions would Lynn be in trouble?

The market price at harvest time is double what he hedged the beans for and he makes 30 bushels per acre

If the Murphy Farms' term-debt coverage ratio was 2.09:1, what will this ratio show the Murphys about their ability to cover all current (farm and non-farm) term debt payments?

The ratio indicates the farm business has $2.09 for each $1 of debt payment

Dana's cow gets out and is found by Chris. Chris has several options, which one is NOT true?

The stray cow becomes the property of Chris after 24 hours

Dana's cow gets out and is found by Chris. Chris has several options, which one is NOT true?

The stray cow becomes the property of Chris after 24 hours.

Which of the following is the major difference between an estate plan and a succession plan?

The transfer of business management

A producer bought a new combine which was larger and much more expensive than his old one, so he said, "I need to rent more acreage so that my:

average fixed cost per acre will decline."

Most states have laws that govern boundary fences. In some states the fencing regulations are left largely to local government. Although, laws vary and are subject to change, which one usually prevails?

There are state laws that require landowners to enclose their land with a fence tight enough and strong enough to turn livestock.

What is the single best record keeping system for everyone?

There is no single best record keeping system for everyone

The price of corn was high this year. What factor probably caused the price to be higher than normal?

There was a shortage of corn.

Which of the following is not a characteristic of a cooperative?

They emphasize high profits

Which of the following is not a characteristic of a cooperative?

They emphasize high profits.

The people below have their current ratio of assets to liabilities listed beside their name. Based solely on this ratio which would you most likely lend money to?

Thomas 6:1

The primary purpose of the total budget is...

To show what the net return to the owned resources of the farm will be under the farm plan

A farm or ranch is termed solvent if which of the following apply?

Total assets are equal to or greater than total liabilities.

Which of the following protectionist arguments is considered a valid economic argument that does not violate the comparative advantage principle?

Trade barriers will keep markets from specializing.

In the long run:

all things are variable

Net worth is equal to...

assets minus liabilities.

If the use of a tractor is decreased from 750 to 500 acres per year it's:

average fixed cost per acre will increase

If the variable operating costs of Lisa's watermelon production is $334.57 and the yield is 7 tons, what is Lisa's break-even price per ton?

$47.80

Which of the items listed below is a. liability?

$5,000 mortgage

How much will the yearly depreciation be if you use the straight line depreciation method for a computer system costing $3,500 with a seven year life?

$500

How much investment credit can be taken on a $6,000 machine which will last 7 years?

$600

If a farmer's equity is $560,000 and his liabilities are $270,000, his debt-equity ratio is:

0.48

A feed dealer makes a credit charge of 1 1/2% monthly on all bills not paid by the 10th of the month following the monthly billing on the first. The annual percentage interest rate would be:

18%

Ann made $41,303 profit on her nursery operation last year. Her capital investment was $216,108. What was her rate of return to capital invested?

19%

A debt-to-net-worth ratio should not exceed ________.

1:1

Which of the following Net Capital Ratios would indicate the best financial position? (Total Assets / Total Liabilities)

2.8

A management tool that shows the physical and financial plan for the entire farm or ranch business for a specified period of time is:

A whole farm budget

Which of the following is considered the first step in developing a budget?

Appraising the business and family goals and objectives

Net worth equals:

Assets - Liabilities

A balance sheet will list which of the following items?

Assets and Liabilities

If the Shady Lane Vineyard and Winery plants more acres of grapes, which of the following costs is least likely to change?

Average variable cost per acre

As an employer, your responsibilities to your employees include all of the following except which one?

Avoid making rules about conduct of employees while at work

This financial statement lists assets, liabilities and owner equity at a particular time.

Balance sheet

Out of the following, which one usually has a low capital turnover ratio and low profitability?

Beef cow-calf operations

Under this type of economic system, people, rather than the government, own the resources and run the businesses. It is known as what kind of economy?

Both capitalist and market

John Boon and his son Bob purchased some land recently. Bob wanted to cut the timber immediately but John, much the wiser, said no, let's wait a year and get the advantage of - .

Capital gains

Property is owned by two or more owners with undivided interests

Co-ownership

Production of basic agricultural commodities and the incorporation of value added services at various stages of marketing respond to:

Consumer behavior

Planting a combination of corn silage, commercial dry beans and winter wheat would utilize which risk management strategy?

Diversification

Planting a combination of grape varieties would utilize which risk management strategy?

Diversification

The willingness to buy a commodity at a specific price is the ________.

bid

A written promise to pay a debt by a specified date is called a ____.

bond

If Mary Jones's corn yield doubles, her:

break-even price will decrease

A plan that projects expected returns and costs is called a...

budget

According to Herzberg, which of the following is a maintenance factor?

Salary

The tax form used to list farm income and expense items is ________.

Schedule F

The IRS form used to calculate self-employment tax is

Schedule SE

A decrease in supply will usually result in a decrease in market equilibrium

TRUE

Where the probability of an event occurring cannot be empirically determined

Uncertainty

Gives the owner the unrestricted right to sell, mortgage or dispose of real estate.

Fee simple

When the Murphy's sell fall soybeans to the Bio-Diesel plant in May for fall delivery it is considered a:

Forward contract

Which of the following statements is correct about the law of supply ?

High price = more product supplied.

An effective union will have the following effect on its labor market:

Increase the union wage, decrease number employed in industry

Economic device whereby an individual or firm substitutes a certain cost for an uncertain financial loss.

Insurance

What is a line of credit?

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.

Immigration will have the following effect on wages and jobs:

Its effect on the wage cannot be determined.

In preparing a cash flow plan, one should not include which expense items:

Machinery depreciation

Modern farming is best described as...

capital intensive

An estimate of monthly cash inflows and outflows is a:

cash flow projection

The most important source of credit is ________.

commercial banks

One of the best measures of liquidity is:

current ratio

Which of the following is considered a capital investment?

dairy cow

A legally enforceable arrangement or agreement between two or more parties is a(n):

deal

Speculators and hedgers

deal in the futures market.

Which of the depreciation methods allow the greatest amount of depreciation during the first full year of service?

declining balance

If interest rates rise, bond prices will

decrease.

If farmers experience a crop failure the GNP (Gross National Product) is...

decreased

The number of farms in the U.S. is...

decreasing.

A document that shows the exact size, location, ownership, and method of ownership of property is a...

deed

A document that shows the exact size, location, ownership, and method of ownership of property is a...

deed.

The first step in making a sound management decision is to:

define the problem.

Any time a consumer will take more only at lower prices is called ________.

demand

Even though corn prices are at record levels, corn farmers still receive from USDA

direct payments

D. borrowing heavily"

diversification

The accounting system that keeps balance in financial transactions is:

double entry accounting

The time a check is in transit between the bank it was deposited at and the bank it was drawn on is called:

float time

A major goal of producers who grow only one crop is to:

free-up their time for off-farm work

A farm business with declining average total costs has

increasing returns to size

An advantage of the corporate form of business organization is:

limited liability

An example of a variable cost of producing strawberries is:

mulch.

Earnings in a cooperative are usually distributed:

on the basis of patronage

Variable costs may also be called:

operating cost

Joe has $5,000 on which he can make 10% interest if he puts it in a savings account. Instead he decides o invest it in hogs. The $500 per year in interest from the bank that he could have received is called:

opportunity cost

Maynard worked for his father during the summer instead of a job offered to him at the feed store. The income he gave up at the feed store was a/an cost

opportunity cost

Suppose John Brown has 100 acres of cropland. He wants to plant it in corn and soybeans. To decide what ratio of corn and beans will give him the most returns he should use a:

partial budget

Which of the following would a producer be most likely to use to determine the potential effects on profits of changing the mix of crops grown on the farm?

partial budget

A statement of projected costs and returns associated with some change in the normal operation of the business is called a(n)...

partial budget.

All of the following are said to be inelastic with regard to demand except...

pork

All of the following are said to be inelastic with regard to demand except...

pork.

The importance of a decision may be measured by the ________.

potential for gain or loss

Which of the following is not a depreciable asset for a nurseryman?

pots

A regular payment required to purchase insurance is a ____.

premium

The principle components of an agricultural commodity option include...

premium price, underlying futures price, strike price, short-term interest rate and expiration date.

A depreciation schedule should not include:

present market value

The demand curve represents a relationship between:

price and quantity purchased

The long-run price for monopolistic competition is

price=average total cost.

Select the item that is not deductible on Federal Income Tax returns

principle payments

The socioeconomic view is that management's social responsibility goes beyond making profits to include

protecting and improving society's welfare.

One possible advantage to Jim and Nancy for organizing Shady Lane Vineyard and Winery as a corporation is _________.

protecting personal assets

An advantage of making an estate the beneficiary of a life insurance policy is to:

provide liquid funds to satisfy tax liability.

A farm net worth statement

provides a financial picture of the farm business as of some particular date.

An appropriate use for short-term credit would be to...

purchase fertilizer and seed.

Long-term credit should be used to:

purchase land and buildings

An appropriate use for long-term credit is to:

purchase land and buildings.

A producer who wants to protect his price with options would purchase a ________.

put

A farmer who wants to have the right, but not the obligation, to sell a particular commodity at a specified price level would use a

put option

Which is not a commodity traded on the futures market?

quantity produced and the quantity consumed or purchased

A quick advance in prices is a ________.

rally

Which of the following costs is considered to be a fixed cost?

real estate taxes

Which of the following is a fixed cost?

real estate taxes

A banker loaning money to farm operators may require a cash flow analysis to:

reduce the farmer's chance of obtaining a loan

One advantage in renting equipment is to:

release capital for other uses

Examples of fixed costs are:

rent, taxes, and insurance.

On a chart, a line that connects all the high points as the markets move higher forms a trend line. When projected out, it forms points of ________.

resistance

All of the following are said to be elastic with regard to demand except:

salt

All of the following are said to be elastic with regard to demand except...

salt.

I sold my old worn out tractor I had used for twenty years for $300.00. This is the .

salvage value

Which of the following is NOT a type of budget used by farmers and ranchers?

sample budget

Most local government expenditures go to

schools.

Most farm businesses in the U.S. with sales over $25,000 per year are ...

sole proprietorships.

The ability to pay debts as they come due is called:

solvency

Your ability to pay all debts if you liquidated your business is called:

solvency

A business is said to be ________ if total assets exceed total liabilities.

solvent

Which is considered an intermediate asset?

sows for breeding

Cotton farmers in the early 1900's were devastated by the boll weevil. This is an example of the higher risk involved with ________.

specialization

Farmer Jones doesn't own, plant, or raise wheat, but has just purchased a futures contract. Is he:

speculating

Cliff is a computer specialist. He does not own, plant, or raise soybeans, but he has just purchased a futures contract for soybeans. He is:

speculating.

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...

speculator

Hedgers and speculators in the futures market are different in that...

speculators do not produce a product to sell

Hedgers and speculators in the futures market are different in that...

speculators do not produce a product to sell.

A major goal of diversified farming is to:

spread risk among several enterprises.

A share in the ownership of a corporation is called a

stock.

If the Government were to set the price of milk at an artificially high price then a is likely to occur

surplus

If the price of an agricultural commodity is too high, the supply will be greater than the demand resulting in:

surplus

An IRA is a...

tax sheltered retirement plan.

An LLC (Limited Liability Company) is usually

taxed like a partnership

The organization in charge of monetary policy is

the Federal Reserve System.

When prices increase consumers buy less. This is called

the Law of Demand.

The concept of power refers to

the ability to influence the behavior of others.

Liquidity is best defined as:

the ability to meet cash obligations as they come due

Mr. Flanders is currently growing corn on a 40 acre tract of land. He plans to use a partial budget to determine if soybeans will be more profitable. Which of the following items would not be included in the partial budget.

the cost of the land.

Mr. Jones is currently growing cotton on a 40 acre tract of land. He plans to use a partial budget to determine if soybeans will be more profitable. Which of the following items would not be included in the partial budget?

the cost of the land.

Where would the farm business profit for a year be found?

the income statement

A limit move is...

the maximum amount up or down a futures contract can move in any one day

Inflation means:

the purchasing power of a dollar declines over time

Which of the following is a disadvantage of the partnership form of doing business?

there is unlimited liability to equity holders

Goals are important in farm management because:

they give direction in decision making.

Comparative advantage argues that if two countries specialize and engage in free trade

they will both gain.

Which item is most likely to produce capital gains when it is sold?

timber

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.

time value of money

A good use for cash flow planning is:

to obtain a loan for operating capital.

Current ratio is one of the most used of all financial management ratios. It measures the liquidity of your business - the short-run ability of your operation to service debt. The procedure for calculating the current ratio is .

total current assets divided by the total current liabilities

The difference between net worth and total assets is:

total liabilities.

The "gross sales" of an operation is defined as:

total sales before any expenses are subtracted.

Someone who is neither invited nor desired in your place of business is a ________.

trespasser

A written agreement by which an owner of property transfers the title to someone to manage and safeguard for the benefit of beneficiaries is a...

trust

A written agreement by which an owner of property transfers the title to someone to manage and safeguard for the benefit of beneficiaries is a:

trust

You must keep records that support an item of income or deduction on a return ________.

until the period of limitations runs out

If the price and consumption of beef goes up then the demand for beef must be .

up

The point where Marginal Costs = Marginal Revenue is ________.

where profits are at a maximum

A legal statement of a person's wishes concerning the disposal of property after death is a(n):

will

Current assets minus current liabilities is...

working capital

Current assets minus current liabilities is:

working capital

In competitive markets, the long-run economic profit is

zero.

What is another term used to describe a net worth statement ?

balance sheet

The document which is used to study the growth of a farm over time is a(n) ...

balance sheet (net worth statement).

Daryl purchased a tract of land and the owner agreed to finance the purchase. The loan was amortized over ten years but a clause in the contract called for the loan balance to come due at the end of five years. This particular type loan is called a ______ loan.

balloon

A list of the critical financial statements does not include the...

bank statement.

A legal process in which people who cannot pay their debts must surrender most of their property is called ____.

bankruptcy

The difference between a cash price at a particular location and a specified futures contract price is called

basis

The difference between futures price and local price is ________.

basis

The difference between the local cash market and the futures market is called the ________.

basis

The difference between the local cash price and the futures price is called the:

basis

When the size of a corn harvest exceeds locally available farm and elevator storage, what usually happens to the local basis?

basis narrows

As a cooperative member, your share in the profits the cooperative made are distributed to you on the...

basis of patronage

The difference between the price of a commodity in the nearby future's market and the local cash price is called...

basis.

A lease between a tenant and a landlord should:

be in writing.

One of the most important points to consider in developing a lease between a tenant farmer and a landlord is that it should:

be in writing.

A trader who expects the market to drop in price considers it to be a ________ market.

bear

All of the following are said to be inelastic with regard to demand except ...

beef

In general, it can be said that when beef prices are low that:

beef supplies are high.

The equilibrium price of an agricultural commodity, at a particular point in time, can be determined by using:

both the supply curve and the demand curve

An estimate of costs and returns associated with a particular enterprise is a/an...

budget

Expansionary fiscal policy usually results in

budget deficits.

A planning document on which you record your expected income, actual income, and spending over a short time is a ____.

budget worksheet

A document that lists projected income and expenses is a...

budget.

A plan that projects expected returns and costs is called a...

budget.

The primary decision-making tool of a producer is the...

budget.

Long term assets include:

buildings

Long term, or fixed, assets include...

buildings

When the market goes up day after day, traders say we are in a ________ market.

bull

One where small supplies and/or strong demand causes prices to rise is known as a:

bull market

A tool commonly used in succession planning to control the ownership of business assets is a ________.

buy - sell agreement

A pollution market for externality rights would

buy and sell rights to pollute.

In theory, how do grain reserves stabilize prices?

by releasing supplies in short production years and absorbing supplies in big production years

Estate taxes are imposed:

by the Federal government after death

If a producer wants to take advantage of a rising market, he would purchase a ________ option.

call

A person goes to the bank to secure a loan to finance a greenhouse operation. He say's "I don't have the money to start this by myself, I need more ."

capital

A net gain from the sale of real or depreciable property held more than one year is a:

capital gain

The profit you earn from selling stock at a higher price than you paid for is called a ____.

capital gain

For capital assets the difference between the purchase price and sales price is taxed as ________.

capital gains

An economic system in which the means of production are privately owned and controlled and which is characterized by competition and the profit motive is called:

capitalism

Which of the following is not a flexible expense?

car payment

Which of the following items would be considered expenses?

car payment

The ___________ method of accounting is most widely used by farmers.

cash

The accounting method used by most farmers for income tax is ________.

cash

When calculating their taxable income for the year, most farmers use which accounting method?

cash

Which of the following accounting systems is the simplest?

cash

When Jim and Nancy want to acquire more grapes than they can grow, they could offer other producers ________.

cash contracts

An estimate of monthly cash inflows and outflows over a year, is a:

cash flow projection

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?

cash flow statement

A producer realized that he would have to borrow money for operating capital at some point during the year but didn't know exactly when. His Vocational Agriculture teacher suggested that he should prepare a to answer this particular question

cash flow statement

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) ...

cash flow summary.

Accounting methods that accurately reflect income and expenses are satisfactory for income tax reporting purposes. The ___________of accounting is most widely used by farmers.

cash method.

One example of a current asset is (a) .

cash on hand

An increase in the price of steak:

causes consumers to switch to eating more pork and chickens, thus increasing the price of these items

Partial budgets help analyze...

changes within enterprise budgets.

The appreciation of the yen versus the dollar means a vacation for Japanese tourists coming to the United States

cheaper.

The depreciation of the dollar versus the yen means U.S. exports are

cheaper.

Livestock, land and other personal property used to secure a loan is knows as...

collateral

Livestock, land, and other personal property used to secure a loan

collateral

When a banker asks a person to pledge his land, livestock or similar property to obtain a loan, this property is referred to as...

collateral

When a banker asks a person to pledge land, his truck, and livestock to obtain a loan, this property is referred to as...

collateral.

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...

commercial banks would not

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...

commercial banks would not make loans to farmers

One method of bringing a group to agreement is called

consensus.

Which of the following is not one of the three basic forms of business organizations?

consortium

A written statement that shows the exact size, location, ownership and method of ownership of property is called a:

contract.

A major advantage of owning a business is ________.

control over your destiny

A group of Vocational Agriculture students agreed to pool their money and purchase feed in bulk and distribute it at cost to each student as needed. This was a simple form of a .

cooperative

A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is a ___________.

cooperative

A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is a:

cooperative

From which of the following businesses or business types would you expect to receive a patronage refund?

cooperative

Which type of business would distribute patronage refunds?

cooperative

A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is a ...

cooperative.

A nonprofit business organization that is owned and controlled by the members for the mutual benefit of the members is called a ...

cooperative.

The primary source of tax revenues for most states is

corporate income taxes.

A legal entity, which is separate from stockholders, and protects the stockholders from personal liability, best describes a(n):

corporation.

The book value of a piece of equipment would be the:

cost of the item minus any adjustments such as prior depreciation

"Borrowing power -- the potential debt an individual or business can incur, usually in times when equity capital is insufficient," is a good definition of ______.

credit

The projected cash flow is useful in estimating:

credit needs

A measure of your credit worthiness is your ____.

credit rating

Government borrowing that leads to less private borrowing and investing is called

crowding out effect.

Items that are most marketable and are readily converted into cash without loss.

current assets

Which items are most readily converted into cash without loss?

current assets

Johnny has a dept of $1000.00 that must be paid next month. His debt would be listed as a...

current liability

Which of the following is a type of depreciation/

declining balance

As output is increased, average fixed cost will:

decrease

If demand for a product goes down and all other factors remain the same, then the price of that product will probably:

decrease

If the strong dollar reduces the demand for U.S. wheat exports, then we can expect the market price for wheat in the United States to:

decrease

A supply increase will

decrease equilibrium price.

Rising real interest rates will likely

decrease gross investment.

Increased environmental regulations will likely

decrease pollution and increase costs of production.

If demand for a product goes down and all other factors remain the same, then the price of that product will probably

decrease.

Matthew will have some timber available to sell in December, 1987. His income for 1987 is going to be about $40,000 but his estimated income for 1988 is $20,000 because his wife plans to quit work to begin a family. With no significant changes in the tax law between 1987 and 1988, he will probably be better off to:

defer the sale of the timber until 1988

Ethics refers to rules and principles that

define what is right and wrong conduct.

The total quantity of goods and services that buyers are willing and able to buy at various prices at a given time is called .

demand

The total quantity of goods and services buyers are willing and able to buy at various prices at a given time is called:

demand.

As a general rule, you should purchase life insurance if:

dependents rely on your income to live.

James thought that his sprayer would last five years. He should . . .

depreciate it over a period of five rears

Pam said, "I paid $12,000 for this truck two years ago and would like to sell it for $10,000, but I know it has ________ more than that."

depreciated

The appreciation of the yen versus the dollar means the value of the dollar has

depreciated.

When a piece of equipment such as a combine or a truck, has declined in value over its useful life, it has...

depreciated.

A decline in the value of an asset over its useful life associated with use, age and obsolescence is:

depreciation

A decline in value of an asset over its useful life associated with use, age and obsolescence is known as...

depreciation

A decline in value of an asset over its useful life associated with use, age and obsolescence is known as:

depreciation

A decline in value of an asset over its useful life associated with use, age, and obsolescence is known as...

depreciation

A method of prorating the cost of a capital asset over its useful life is ________.

depreciation

A pork producer who does not produce this year will lose some money including _____.

depreciation

One example of a fixed cost is...

depreciation

The decline in value of an asset is called...

depreciation

Which of the following is NOT a variable cost?

depreciation

Which of the following is a fixed expense?

depreciation

Which of the following items would most likely result in a loss for a vegetable producer who decides not to plant anything this year because of low prices?

depreciation

In an on-going farm business, which of the following is considered a fixed cost?

depreciation on equipment

Which one of the following groups of terms is used to calculate the fixed cost of machinery and equipment?

depreciation, interest, taxes, insurance

A decline in value of an asset over its useful life associated with use, age and obsolescence is known as ...

depreciation.

All of the following are examples of items resulting in variable costs except:

depreciation.

The decline in value of an asset over its useful life associated with use, age and obsolescence is known as...

depreciation.

If you make a mistake when filling out a check, you should...

destroy the check and write a new one

Which of these does a profit and loss statement not accomplish?

details cash flow problems

What is not a specific purpose of a cash flow analysis? To...

determine the profitability of a particular operation or enterprise

200 bu. 2300 lbs. fertilizer $600 gross returns"

diminishing returns

A measurable point where an increase in the addition of a variable cost item decreases the actual output of an enterprise is referred to as

diminishing returns

A measurable point where an increase in the addition of a variable cost item decreases the actual output of an enterprise.

diminishing returns

The amount of profit generated by additional inputs is known as ________.

diminishing returns

The point where an additional unit of a variable cost item decreases the actual out-put of an enterprise is called the point of...

diminishing returns

Insurance that is designed to replace your lost income when you cannot work because of an accident or illness is ____.

disability income insurance

Most partnership divisions and terminations are caused by...

disagreement over trivial matters

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.

discounting

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.

discounting

The process of finding the present value of a dollar to be received at some future date is known as:

discounting

The dynamic process of searching for the equilibrium or market-clearing prices is called ________.

discovery

One method Shady Lane Vineyard and Winery can manage risks is by ________.

diversification

Rate of return on investment for a farm business is calculated by:

dividing return to capital by average total assets.

The rate of return on investment for a farm business is found by...

dividing return to capital by total asset value

Speculators in the futures market:

do not produce any of the products they buy and sell.

If you negligently keep an object or condition on your land that is attractive and dangerous to children, you will be liable if a child is injured by that object or condition. This is called:

doctrine of attractive nuisance

Cooperatives are best characterized by the fact that

each member has some voice in the cooperative business affair

Cooperatives are best characterized by the fact that:

each member has some voice in the cooperative business affair.

Early theories about how individuals make decisions were based on the concept of a/an

economic man.

Thomas is a poultry producer for Gold Kist. I can purchase all the dressed chickens (originally from Thomas's farm) my family needs at the supermarket cheaper than I can raise and dress them myself. This can be explained by the theory

economies of scale

The cost of production on Thomas's Sod Farm was $905.00 per acre when he had 50 acres in production. When he increased his acreage to 75 acres his cost per acre decreased to $900.00. Thomas was experiencing the phenomenon

economy of scale

The biggest expenditure for state governments is

education.

The percent change in quantity divided by the percent change in price is defined as:

elasticity

A budget for corn would be a(n):

enterprise budget

A statement of expected returns and costs that are associated with the production of one product is a(n):

enterprise budget

When demand decreases

equilibrium quantity decreases.

When demand and supply are equal, price is said to be at

equilibrium.

When demand and supply are equal, price is said to be at:

equilibrium.

Value-based management is an approach to managing in which managers

establish, promote, and practice an organization's shared values.

Planning the acquisition, enjoyment and distribution of property for the benefit of their family is a(n):

estate plan

Planning for retirement, transferring property ownership and conserving the estate of a farmer are objectives of:

estate planning.

The bank officer will appraise my farm. This means he/she will:

estimate its fair market value

A producer most often uses a cash flow statement to...

estimate the amount of credit needed and when it will be needed.

A banker loaning money to farm operators may require a cash flow analysis to:

evaluate loan repayment potential.

Lenders often require cash flow analyses to:

evaluate repayment potential.

The equilibrium price for a product is the price at which the quantity supplied is ____.

exactly equals the demand

Taxes on the sale of tobacco, gasoline, and alcohol are ____.

excise taxes

Which of the following is not one of the three parts of a net worth statement?

expenditures

Functional managers are responsible

for a single area of activity.

In a partnership each partner can be held responsible...

for the total debts

Which of these terms is most closely related to a Futures contract?

forward contact

You are a soybean producer and want to remove some of the risk involved. You could . . .

forward contract the beans

Sara wanted to remove some of their risk from her greenhouse business, so she...

forward contracted

Suzie signed a contract to sell her soybeans locally to a feed dealer. The best term for this transaction is ...

forward contracting.

"

franchise.

An example of a variable cost of machinery operation would be...

fuel for the equipment

A contract calling for delivery of a carefully described commodity at some later time period is a(n):

futures contract

An agreement to buy and receive or to sell and deliver a commodity at an upcoming date with certain specified characteristics is a:

futures contract.

A rise in the price of all the following materials would change the demand for which of the materials least?

gasoline

Which of the following would probably see the least change in quantity demanded it the price was increased?

gasoline

Successful global management requires an attitude that is best described as _____________.

geocentric

An agricultural manager should have goals and objectives established for the efficient operation of a business. What is an advantage of setting goals?

goals show where you are going -- provides a "road map" and gives direction to the business

Most union members work in

government.

The grain embargo against Russia is an example of...

governmental interference with the free market.

Some policies are imposed by external forces, such as

governmental regulatory agencies.

At the end of a sale day, Joey's roadside market had received $687.00 from produce sales. This was...

gross receipts

Net cash income is:

gross receipts minus cash expenses (operating and fixed)

Hedging does all the following except...

guarantees a profit to the producer

Hedging does all the following except:

guarantees a profit to the producer.

Assuming no inflation, a dollar received today:

has greater value than a dollar received one year from today.

You are hired by a bank to determine if Bob Smith's Orchard is over capitalized. You report to the bank that yes, he is over capitalized. In other words Smith...

has more production assets than is really required for his operation

Strong cultures

have a greater influence on employees than do weak cultures.

Government farm programs:

have changed often over time

Monopolistic competitors are best described as

having some control over price.

Which of the following is NOT a futures trading term?

haw

Ninety-nine percent of Scott's net worth is in land. What can be said of his situation?

he does not have good liquidity

What can be said about Mr. A?"

he has very safe investments

If a farmer sells his livestock and machinery and produces nothing on his land, then...

he would still have fixed costs

Another name for forward pricing with futures contracts is...

hedging

The buying or selling of futures contracts as substitutes for later cash transactions to insure against price changes is ________.

hedging

There is a great deal of difference between which of these terms:

hedging - speculating

John's main job is programming computers. After work and on days off he raises soybeans. John has just sold a contract for his soybeans. He is:

hedging.

The process of using futures contracts for forward pricing is called...

hedging.

Which of the following should be listed in the account book as the purchase of a capital asset?

herd sire.

If you apply for a second mortgage on your farm and the prime rate is the same as when you obtained the first mortgage, the interest rate for the second mortgage is likely to be than the interest rate of the first mortgage?

higher

Just before John planted his peanuts, there was a severe drought and he has decided not to plant at all this season. John stands to lose

his fixed costs

From which of the following can you make the best determination as to the financial status of a person?

his net worth

Which of the following is a commodity traded on the futures market?

hogs

Organization structure primarily refers to

how activities are coordinated and controlled.

The primary purpose of the production function is to determine

how much to produce

Cooperatives differ from non-cooperative corporations in which area.

how voting is done

Cooperatives differ from noncooperative corporations in which area?

how voting is done

Cooperatives differ from noncooperative corporations in which area?

how voting is done.

Communication begins with

idea origination.

The problem-solving process begins with

identification of the difficulty.

The producer of a commodity which has an inelastic demand knows that:

if less is produced by the industry, total industry revenue will increase.

A purchase made on a whim without using a decision-making process is a(n) ____.

impulse purchase

The role of price in a free market is to serve as a guide:

in deciding what, when and how much to produce

In a free market, the role of price is to serve as a guide:

in the decision of what, when, and the quantity to produce

The North American Free Trade Agreement

includes Mexico and Canada.

Industrial unions like the United Auto Workers are examples of

inclusive unions.

A budget predicts

income and expense.

A budget predicts:

income and expense.

Which of the following is not nonfarm earnings?

income from the sale of a tractor

Receipts are..

income received from sales of commodities produced, services rendered , etc.

Receipts are:

income received from sales of commodities produced, services rendered , etc.

The financial statement that measures the profit of a business is the ________.

income statement

Form 1040 schedule F is a/an .

income tax form for farmers

As an individual ages, the cost of a term life insurance policy would be likely to :

increase

Assume that the government passes a law forbidding banks to foreclose on financially stressed farms to recover their loans. A likely effect of this law would be to cause interest rates charged to all farmers to:

increase

Crop prices increase, causing Marcia's sales income to increase while leaving her cash operating expenses unchanged. This will cause her capital turnover to

increase

Advertising is designed to:

increase demand.

A poultry producer is producing 100,000 broilers a year, but after determining he was in stage I of production he decided he needed to. This would allow him to maximize his profit.

increase his flock to a number greater than 100,000.

When supply decreases, the equilibrium price and quantity will

increase in price, decrease in quantity.

Specialization in crops or livestock in a farm business tends to:

increase income and increase risk

The purpose of job enrichment is to

increase job effectiveness.

Monetary policy to fight demand pull inflation would

increase reserve requirement, raise discount rate, and buy government securities.

When supply increases, the equilibrium quantity will

increase.

An increase in the price of beef and pork will likely result in:

increased consumption of poultry

Good reasons to borrow money include:

increased returns are greater than the cost of borrowing money

When a farmer increases his investment in land, buildings, and equipment without increasing the total units of production, the cost per unit of production:

increases

When there is a greater demand for a product than there is supply of that product, the price...

increases

Successful advertising:

increases demand for the product advertised.

In the long run, as the price of corn increases the supply:

increases.

The size of farms in the U.S. is...

increasing

Producers can diversify or specialize in their production. When producers diversify they are trying to manage some of their risk. When specializing they are:

increasing efficiencies in the enterprise.

Producers can diversify or specialize in producing products. When producers specialize in an enterprise they are, generally, ...

increasing efficiency in the enterprise.

Producers can diversify or specialize in producing products. When producers specialize in an enterprise they are, generally,...

increasing efficiency in the enterprise.

The size of farms in the United States is:

increasing.

An electrician you hire for a fee to repair an irrigation pump would best be described as a(n):

independent contractor.

If the price of a product increases and the demand does not change, the demand for the product is said to be:

inelastic

Since there is no substitute for food; as a whole, the demand for agricultural products tends to be:

inelastic

When the change in price is greater than the relative change in quantity taken, an agricultural commodity is said to be:

inelastic

If the price of a product increases and the demand does not change, the demand for the product is said to be:

inelastic.

Whole life insurance provides:

insurance coverage for the policy holder over his entire life and may be a source of inexpensive loans.

Which of the following should not have been listed on Sam's inventory?

insurance premiums

An example of a fixed cost is:

interest on investment

Accrued interest on a balance sheet refers to:

interest that has accumulated since the last loan payment

The cost to carry past the point of harvest should cover ________ and ________ costs.

interest; storage

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) ______________.

inventory

An itemized list of goods on hand with their estimated worth is called a/an:

inventory

Sarah made a list of the plants on hand in her greenhouse operation and estimated their worth. This was a/an:

inventory

One example of a current asset is (a) ________.

inventory held for sale

Developing an accrual adjusted income statement requires ________.

inventory records, cash revenue, cash expenses and depreciation records

A physical account of all assets in a business is called a(n) ...

inventory.

Cindy has the option of investing her money in non-taxable bonds at 8% interest or in a money-market fund at 10%. She is in the 40% income tax bracket, what should she do?

invest in the bonds

As an incentive to investors, some of the capital invested in agriculture can be recovered quickly by claiming a(n) on their tax return

investment credit

To reduce supply often times the market price ________.

is below cost of production

A high leveraged farm or ranch business:

is more susceptible to business risks

An advantage of a farm corporation is that:

it limits liability of the owners

An advantage of a farm corporation is that:

it limits liability of the owners.

Of the following, which one is NOT an example of business expenses?

items purchased for resale

Technical skills include

knowledge of and proficiency in a certain specialized field.

Which is considered a fixed asset?

land

Which of the following is NOT depreciated for tax purposes?

land

Which of the following should not be depreciated?

land

The average size of full-time farms in the U.S. is ______ in 1945.

larger than

In comparing the federal expenditures on discretionary spending with nondiscretionary spending, nondiscretionary spending is

larger.

While guiding organization members in appropriate directions, a manager exhibits

leadership behavior.

An increase in the value of the U.S. dollar relative to the currency of other countries should result in:

less costly imports to the U.S

Forward contracting provides the farmer with:

less price uncertainty

When the price of a product goes down (assuming no change in other factors)...

less product is supplied.

A lower price most likely indicates

less scarcity.

The returns for a farmer who produces his crop under a contract as compared to a farmer who produces none of his crop under contract would be

less variable

A farmer had only $5,000 to invest in a cattle feeding operation. In addition he borrowed $20,000 to increase his...

leverage

Borrowing money is a good way to increase _________.

leverage.

All debt obligations are ____________.

liabilities

All your debt obligations to others are ____________.

liabilities

Another term for debt is:

liability

When one is negligent and therefore liable for injury or damage caused to someone else what insurance covers this?

liability

What type of insurance protects the farmer from lawsuits if he/she causes personal injury or property damage to another person?

liability insurance

The maximum permitted price increase or decrease from the previous day's closing price is the ________ price move.

limit

An advantage of the corporate form of business organization is...

limited liability

The ability of a business to make enough cash to pay bills without disrupting the business is called:

liquidity

The ability of a business to pay off liabilities without disrupting business is termed:

liquidity

A disadvantage of being an employee is ________.

little or no control over future job

Which of the following is a variable cost?

livestock feed

Which of the following is deductible on farm income taxes?

livestock feed costs

One way government might influence the production of certain products or commodities would be to...

loan money at low interest rates to producers.

Loans for 8 to 10 years are called ________.

long-term loans

Suppose a producer planted two acres of pick-your-own strawberries and sold them all on the first day he opened for business. Which action below would not be logical?

lowering the price.

Other things equal, the value of land will be greatest to the farmer who has the

lowest discount rate

What item could be used as collateral to secure operating capital?

machinery

Which of the following is a fixed cost? Cost of...

machinery

Which of the following is not a current asset?

machinery

If the revenue from an enterprise is more than the total variable and fixed costs, a producer will

make a profit.

Larry has hedged his peanut crop. If he makes the predicted yield and his costs do not change he will...

make almost exactly what he predicted no matter how low or how high the price goes

Larry has hedged his peanut crop. If he makes the predicted yield and his costs do not change he will ...

make almost exactly what he predicted no matter how low or how high the price goes.

Workers' Compensation ________.

makes the employer liable for most injuries suffered by an employee

Net farm income represents a return to what factors of production?

management, capital, and unpaid operator and family labor

What are the four (4) parts of production?

management, land, labor, capital

The amount of money that must be deposited when a producer holds a futures position is ________.

margin

The money you must deposit with a broker to insure performance in order to trade in the futures market is called

margin

Marvin raises purebred Simmental cattle. The money he spends on hay and feed would be termed a

marginal cost

The cost of producing one additional unit of output is called:

marginal cost

The short-run supply curve for a firm is identical to

marginal cost

When planning a change in resource use in a farm business, which of the following comparisons is considered most important?

marginal cost to marginal return.

Using comparable sales for the purpose of appraising farmland is called the

market approach to appraising

The coordination of activities that are involved with the buying or selling of a product is called...

marketing

The coordination of activities that are involved with the moving of a commodity from the producer to the ultimate consumer is:

marketing

The processes and services involved in moving a commodity from the producer to the ultimate consumer is called...

marketing

A contract to sell grapes to the Shady Lane Vineyard and Winery at a specified price at harvest is called a ________.

marketing contract

The coordination of activities that are involved with the moving of a commodity from the producer to the ultimate consumer is referred to as ...

marketing.

Good income tax management is to ________.

maximize after-tax income

For maximum profit, one should strive for...

maximum net profit

Management is considered good if ________.

maximum profits are achieved

If the revenue from an enterprise will cover variable costs and most of the fixed costs, a rational producer will:

minimize his losses by producing in the short run

If the total revenue of a farmer will cover his variable costs and some but not all of his fixed costs, he will:

minimize his losses by producing in the short run

Records adequate for income tax purposes are considered the/an amount of records to keep for business purposes.

minimum

USX (formerly U.S. Steel) has become mostly an energy company. This is an example of a change in

mission.

When using published enterprise budgets, a producer should:

modify the budgets to suit his situation.

Which of the following is not a basic form of business organization?

monopoly

To the untrained eye, workers at businesses such as the telephone company and the post office may not appear to be moving when actually they are just very slow workers. Slow service is often blamed on the situation of those businesses, where workers have no incentive to do a good job.

monopoly market

If the U.S. government granted you exclusive rights to produce Vidalia onions, that would be a(n):

monopoly.

Which of the following is a fixed expense?

monthly apartment rent

An advantage of the cash method of reporting income and expenses is:

more flexibility to choose when to take income and deduct expenses.

Renting farm land on shares of production rather than cash results in:

more risk for the landlord, less risk for the tenant.

An amortized loan with level payments each year has:

more than one of the above

When a farmer borrows money to purchase land, he usually must offer the title to the property as security until the loan or debt has been repaid. This credit instrument is commonly referred to as a:

mortgage

If a hedger is to carry a hedge through completion, the hedger:

must be prepared to meet all margin calls.

The hours, location, physical activity, and variety of tasks involved in an occupation are called ________.

nature of work

The futures contract month closest to maturity is ________ delivery month.

nearby

Which of the following factors should probably be considered in deciding whether to store soybeans until next spring rather than sell at harvest. (Assume that storage facilities are already available on the farm).

need for capital at harvest and price outlook

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 _________."

negligence

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 through the hole. The judge said, "You failed to take ordinary care to protect your worker. In other words, I find you guilty of ."

negligence

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."

negligence, liability

Which of the following does not appear on the net worth statement?

net farm income

Returns to unpaid operator and family labor, equity capital, and management is:

net farm income.

management is:"

net farm income.

If a producer had an opportunity to choose the amount of the payment on his long term loans, which would he use to determine the amount he could pay?

net income

The financial returns after all costs have been paid is called .

net returns

The difference between total assets and total liabilities is...

net worth

In considering farm financial statements, the balance sheet is also referred to as a/an . . .

net worth statement

What is another term used to describe a balance sheet?

net worth statement

A listing of all property owned and money owed is called...

net worth statement.

The difference between total assets minus total liabilities is...

net worth.

Total assets minus total liabilities equals:

net worth.

A farmer placed too high a value on his land in his closing inventory while all other records were accurate. Net working capital in his record summary is

not affected

A farmer is contemplating buying a combine instead of having his wheat custom harvested. In his partial budget, if additional costs and reduced returns are greater than additional returns and reduced costs he should:

not buy the combine.

A good use of cash flow planning is to:

obtain a loan for operating capital

Which of the following is not a fixed cost in the use of a tractor?

oil and grease

A market where there are a few large firms that control the market is called a(n) ...

oligopoly

Sidney could have invested his $10,000 at 10% interest at a local bank but instead invested in a peach orchard. The 10% interest he gave up was a/an...

opportunity cost

The income that could have been received if the input had been used in its most profitable alternative use is called...

opportunity cost

The income that could have been received if the input had been used in its most profitable alternative use is called ...

opportunity cost.

The income that could have been received if the input had been used in its most profitable alternative use is called:

opportunity cost.

The return an input would have earned in its best alternative use is called its:

opportunity cost.

The demand for U.S. farm products is increased by:

our export markets

The common types of ownership does not include...

owner-equity

A riparian is someone who:

owns land bordering a stream

A riparian is someone who:

owns land bordering a stream.

A budget to determine if holding hogs to a heavier weight would be profitable is termed a(n)

partial

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?

partial

When trying to decide between two enterprises to add to the farm, a producer would use a budget

partial

A financial tool that would be used to compare the feasibility of raising turkeys to 25 pounds vs. 20 pounds is a:

partial budget

A step-by-step process for identifying all the costs and returns that change due to alterations in one or more of the production processes is a(n):

partial budget

Suppose John Brown has 100 acres of cropland. He wants to plant it in corn and soybeans. To decide what ratio of corn and beans will give him the most returns he should use a:

partial budget.

A ___________ is two or more persons who, as co-owners, operate the business.

partnership

When earnings are distributed to owners and then those earnings are taxed as personal income for each owner, this is a

partnership

Net operating savings of a cooperative which are distributed to the Cooperative's customers (patrons) on the basis of the amount of business they do with the cooperative is known as a/an...

patronage dividend

A(n) is a marketplace where there are many businesses producing the same product. A single buyer or seller can=t influence the price structure. No producer is so large as to control or perceptively affect market supply or demand.

perfect competition

Which of the following market structures best describes the market in which an American wheat farmer operates?

perfect competition

The biggest portion of federal tax revenue comes from

personal income tax.

While financial records are critical to the management of a business, in order to have a complete understanding of the business, managers also need ________.

physical records

A budget is a ...

plan that projects expected returns and costs.

Most businesses fail because of __________.

poor management

The demand curve shows the relationship between...

price and the quantity demanded

The demand curve shows the relationship between:

price and the quantity demanded

In the 1996 Farm Bill the Government set the price of peanuts at a minimum of $610 a ton. This price setting can best be termed as a:

price floor

If one of the major soybean producing countries other than the U.S. has a drought this year and soybean production is drastically reduced, what effect if any, will this probably have on the price of soybeans in Georgia?

prices will go up.

Vikki placed $3,000 into a certificate of deposit for a one-year period of time. At the end of the year she had earned an additional $200 on her initial investment. The original $3,000 is known as ____.

principal

Expenses that would be accounted for on an income statement include all of the following except ________.

principal payments

Assuming economies of scale is a barrier to competition, a monopoly would likely

produce at lower per unit cost.

Price received per bag - $5.00"

produce if no alternative crop is available

The elasticity of supply measures the response of a change in price on:

production

The products and services that are provided in most of the areas in the agriscience wheel of fortune seem to flow to or originate from ________.

production agriculture

Operating loans can be acquired from:

production credit associations

The job design would be LEAST formal in a

professional bureaucracy.

The excess of returns over expenditures is known as _________.

profit

The point on a production graph where marginal cost equals marginal revenue is where

profits will be the greatest

A cash flow budget projected for the next year can provide information on:

projected borrowing requirements and repayment ability

Most local government tax revenues come from

property taxes.

A written statement that the seller of property gives to the buyer that gives up only the seller's right to the property but does not imply the property is free from legal claims by outside parties is called a(n)...

quit claim deed

Contractionary fiscal policy will

raise taxes and lower government spending.

A fiscal policy to fight demand-pull inflation would

raise taxes.

Which one of the following is not an example of market cost?

raised breeding livestock

Cash flow summaries, net worth statement, income statement, and detailed enterprise analysis are all forms of:

records

Farm budgets differ from farm records in that:

records are a history of what has happened; budgets are a projection of what will happen.

The chart of accounts is a set of ________.

records that provide the information to construct financial statements

Investment credit for a new piece of equipment can be used to:

reduce federal income tax

The main goal of a good marketing plan is to ________.

reduce risk

By diversifying crop enterprise rather than specializing in one major crop, the farmer will:

reduce risk and uncertainty

The purpose of insurance is to ...

reduce risk and uncertainty

The purpose of insurance is to...

reduce risk and uncertainty

The purpose of insurance is to:

reduce risk and uncertainty

By diversifying crop enterprises rather than specializing in one major crop, a producer will ...

reduce risk and uncertainty.

Signing a contract to produce a product at a set price is done to...

reduce risk.

A grower might sign a contract to produce a product at a set price in order to...

reduce risks

Incorporating, paying down debt, and liability insurance provide a means to ________.

reduce risks

Signing a contract to produce a product at a set price is done to

reduce the risk of unfavorable price fluctuations.

Crop insurance, hedging, options, and liability insurance provide a means of:

reducing risks

The major advantage of renting or leasing a production input such as land or machinery is to:

release capital for other uses

The major advantage of renting or leasing over purchasing land or machinery is to:

release capital for other uses.

The Commissioner of Agriculture proposes a new program to stabilize the price of corn by instituting a reserve system. This will probably work by . . .

releasing supplies in short production years and storing corn in years of heavy production

Tom contracted to deliver 3,500 bushels of soybeans at $6.08 per bushel to a local buyer next December. Tom's motive was to:

remove some of the risk from his business

The management of wetlands comes under the area of ________.

renewable natural resources

Using a resource in the place of another is known as ________.

resource substitution

When analyzing the profitability of a farm business, the first item to consider is the:

return to owned resources.

It is profitable for a farmer to borrow money to expand his farm business when the borrowed money:

returns more than the cost of borrowing money

It is profitable for a farmer to borrow money to expand his farm business when the borrowed money:

returns more than the cost.

In the cash method of accounting, ________.

revenue and expenses are based on actual cash transactions and revenue is reported in the year that cash is received

Mazher has an account that allows him to charge up to $5,000. Each month, however, he does not have to pay the balance in full. Rather, Mazher makes a $75 minimum monthly payment carrying the remaining balance forward from one month to the next. What type of account does Mazher have?

revolving charge account

Most trade occurs between

rich countries and other rich countries.

The owner of a side of a stream or riverbank is called a:

riparian.

If demand rises and supply remains constant, price should?

rise

If pork and beef products compete and beef prices rise, then pork demand will probably . . .

rise

When a producer sells with futures contract, the buyer becomes the ________.

risk taker

Products have "utility to consumers if they meet a need and in the process provide ________.

satisfaction

Interest rates are determined by the . . .

savers and borrowers interacting in the money market

The concept of opportunity cost,,,

says that a resource's opportunity cost is equal to the return it would have earned in its best alternative use

A 62 year old woman wants to pass along her farm and other assets to her children with a minimum amount of taxes. She should:

see someone specializing in estate planning

A 62 year old woman wants to pass along her farm and other assets to her children with a minimum amount of taxes. She should:

see someone specializing in estate planning.

Which of the following is a variable cost?

seed

Which of the following are variable costs?

seed, fertilizer, and fuel

To hedge a crop such as corn or wheat means to:

sell a futures contract when the crop is planted and purchase a future contract at harvest to lock in a fixed price

A livestock producer wishing to use futures markets to hedge the price of cattle to be sold in the future would initially:

sell futures contracts expecting to buy them back when he sells his cattle.

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?

sell now

You put a $200 steer on feed at a cost of 35 cents per day. The animal gains one pound per day. If the price of cattle drops to 33 cents per pound and is expected to remain there, what should you do?

sell the animal immediately

The advertisement read "Liquidation of the Jones Farm." This probably meant that Jones was...

selling out

What type credit would be needed to purchase inputs for producing commodities which will be sold within the next year?

short-term

Goals that can be achieved in less than one year and usually provide immediate satisfaction are:

short-term goals

If the price of a commodity is too low, the demand will be greater than the supply resulting in a

shortage

Policies are sometimes defined as a/an

shortcut for thinking.

A farmer using the accrual system of accounting purchases gasoline on credit.

should be recorded as an expense and also a liability

Interest paid annually at the end of the year on the average balance in a savings account is ____.

simple interest

It is important when using futures contracts that you close out both the cash and futures position ________.

simultaneously

The biggest portion of federal expenditures is

social security.

A business owned and managed by one person is called (a) _____.

sole proprietorship

A business owned and managed by one person is called a:

sole proprietorship

A business that is owned and controlled by one person is a:

sole proprietorship

The most common legal structure of a farm business is the..

sole proprietorship

Most farm businesses in the modern world are:

sole proprietorships

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...

speculator.

Which of the following is most closely related to achieving "economies of size?"

spreading out fixed costs

Storage of a product has the following effects...

stabilizes price and regulates supply

Income taxes are paid to the:

state and Federal governments.

Suppose John goes into the landscape maintenance business. If he has his truck and other equipment paid for and he does all the labor himself then he would...

still have variable and fixed costs

A marketing function which tends to regulate the supply of a product and has a stabilizing effect on the price is:

storing.

Strategic planning as a broad concept consists of

strategy formulation and strategy implementation.

The price at which options are purchased or sold at is ________ price.

strike

The total quantity of goods and services produced is called...

supply

The basic factors that influence prices are ________.

supply and demand

The price of a commodity is basically determined by the...

supply and demand for the product

The price of a commodity is basically determined by the:

supply and demand for the product

The price of a farm commodity is basically determined by the:

supply and demand for the product

The price of a commodity is basically determined by the ...

supply and demand for the product.

The total quantity of goods and services produced is called...

supply.

Price is determined largely by the supply and demand of products. If the government fixes the price above the equilibrium point of the supply and demand curve, a _________ will result

surplus

Knowledge management involves encouraging the members of the organization to

systematically gather information and share it with others.

Three people had $1,000 each to invest. Mr. A. speculated in the futures market, Mr. B. invested in rental property and Mr. C. complained that A & B had made a lot more money on their investment than he had. Mr. B. said "generally speaking, those of us willing to

take the greatest risk

Agricultural producers such as one who produces soybeans are best described as price:

takers

Fixed costs in the operation of an agricultural production business would include...

taxes, depreciation, interest and insurance.

The school of thought typified by Joan Woodwards says that

technology is the most critical determinant of structure.

Life insurance, which provides protection for a limited time and is usually the least expensive per dollar of protection, is called ________.

term

Which type life insurance gives maximum protection at the least cost?

term

Which type life insurance is likely to have the lowest monthly premium?

term

A person who is heavily in debt and has young dependents should consider ______________ for maximum protection at minimum cost.

term life insurance

An advantage of a family farm business structured as a corporation is:

that personal liability may be avoided

Vern and Lewis borrowed $10,000 together to buy a truck and start a hay hauling business. After three months, they were three months overdue with payments and the banker wanted his money. Lewis left town with the truck and gave no forwarding address. Vern decided to quit the business and realized he had lost his half of the truck. He went to the bank to pay his half of the money for the truck. The banker said:

that will be $10,000

The income tax was first used to pay for ________.

the Civil War

The most likely source of loans for young farmers wishing to purchase a farm is:

the Farmer's Home Administration (FmHA).

Liquidity is best described as:

the ability to meet cash obligations as they come due.

Commercial fertilizer should be applied to a crop as long as

the added fertilizer returns more than the added cost of the fertilizer

A major obstacle to starting a farming operation is...

the amount of capital required

When deciding on the level of record keeping for a business, managers need to consider ________.

the amount of information desired from the records, the amount of time they can devote to record keeping and their record keeping abilities

The optimal amount of pollution is

the amount where the marginal benefits equal the marginal costs of pollution.

When a loan is secured, it means that...

the borrower has put up property worth as much or more than the principle of the loan.

When a loan is secured, it means that:

the borrower has put up property worth as much or more than the principle of the loan.

Mr. Johnson harvested corn in October, 1986. He stored the corn and sold it in May, 1987. With the accounting method he uses, he did not report the value of the corn as income on his 1986 tax return but will report it as income in 1987. His accounting method must be

the cash method.

Interest is:

the charge for the use of money

Opportunity costs are:

the cost of using a resource in one way based on the return that could be obtained from using it in the best alternative way

In a Free Market, price is determined by

the demand of consumers vs. the supply of the product.

A soybean producer is attending a class on soybeans in the futures market at the Vocational Agriculture department. He hears the term "basis" in the discussion. "Basis@ is . . .

the difference between the local cash price and the futures price

Capital gains is ...

the gain or loss from the sale of capital assets.

Capital gains is:

the gain or loss from the sale of capital assets.

If government spending is greater than tax receipts, then

the government has a budget deficit and will have to borrow money.

The farm return to land, labor and capital for a year would be found on

the income statement

Charles found that he could reduce the fixed cost per bushel of wheat by increasing his acreage. His fixed cost per bushel was $32 on a 10 acre operation, $16 on a 20 acre operation, $8 on a 40 acre operation, $4 on an 80 acre operation, $2 on a 160 acre operation, etc. Charles was experiencing:

the principle of economy of scale

If the price of inputs has risen 10% since last year but the price received for the crop and the yield is the same, then gross income will be...

the same

Who is at the greatest risk?

the third mortgage holder

A dollar received tomorrow can be worth less than a dollar today, because of:

the time value of money.

A person's estate is...

the total value of their real and personal property.

Purchasing a larger piece of machinery in order to reduce the cost required to complete a particular operation is profitable if:

the value of labor saved is greater than the additional cost of owning and operating the larger machine

In the short run, if variable costs cannot be covered ...

then the product should not be produced.

Why do farmers generally have no control over prices?

there are many sellers competing in the market relative to the number of buyers

A cash lease is good for livestock grazing because it is simple, and reduces the chance of controversy. Frank uses a cash lease when he leases grazing land. He and the landowner set a fixed price per acre when they make their deal. This is the most common type of cash lease. The landlord may prefer the cash lease because:

there is fixed rent

A market characterized by few potential traders and few or infrequent trades is a ________ market.

thin

Gail and her fellow producers often base their price expectations on past price levels. If prices are higher in one year, then they probably will increase production the next. Then the supply will increase and prices will fall. If there is an increase in demand the prices will:

this cannot be determined based on the data given

In a production function, levels of production are divided into:

three stages called I, II, and III

The most important reason for a complete farm record keeping system should be:

to provide information for farm management decision-making.

A main advantage of product diversification is...

to spread risk and stabilize income

A business is solvent if...

total assets exceed total liabilities

A business is solvent if:

total assets exceed total liabilities

Which of the following is (are) an intermediate asset?

tractor

When a country spends more on imports than it earns from exports, what occurs?

trade deficit

The is designed to prevent sudden drastic price declines or rises in the futures market

trading limit

The price of soybeans on the futures market could not fall from $6.00 to $1.00 during a single trading session because of the .

trading limit

A legal document by which a property owner transfers the title of his land to someone to manage and safeguard for the benefit of beneficiaries is a:

trust.

The producer who engages in cash contracting or hedging is:

trying to eliminate price uncertainty.

The producer who uses forward contracts or hedges is ...

trying to eliminate price uncertainty.

The maximum amount that a wife can inherit from her husband without owing any federal estate tax is

unlimited

Current assets are those items that will be ________.

used during the next accounting period and sold during the next accounting period

Fixed cost plus cost equals total cost

variable

Fred Brown raises corn and feeds it to his hogs. This type of business structure is an example of

vertical integration

Agricultural development would be described as ________.

very rapid in the United States in recent years

When a market has huge swings on a daily basis, it is described as ________.

volatile

A company's promise that the product will meet specific standards over a given time period is the product's ____.

warranty

Beavis and Butthead thought it would be cool to play on the obsolete equipment Mr. Brown had parked on his property beside the road. Beavis got hurt and his parents decided to sue Mr. Brown. Mr. Brown's attorney said he might be found liable if the jury or judge determined that the old equipment:

was an "attractive nuisance."

All of the following items are said to be in-elastic with regard to demand except .

wheat

What factor might increase the demand of U.S. wheat

wheat crop failures in Argentina and Russia

The key difference between accrual and the cash method is ________.

when revenue and expenses are recognized

There are three kinds of budgets. Which of the following listings has them ranked from the most to least comprehensive?

whole farm, enterprise, partial

A producer who says, "I'll grow cotton in the short run", probably means he:

will grow the current crop, but then find an alternative crop to produce

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?

with a second mortgage

The funds available to purchase inputs and inventory items after the sales of current farm assets and payment of all current farm liabilities is known as:

working capital.

Why is automobile insurance more expensive for the 16-19 year old group than for the 26-29 year old group?

young people tend to have more accidents

Suppose you go to a bank to get a loan. If you are asked about your equity you tell them about...

your assets minus your liabilities

A budget for soybeans would be termed ...

an enterprise budget.

The legal, economic and social act of determining the allocation of a person's property to appropriate heirs is defined as

an estate plan

A cash-flow projection is defined as:

an estimate of monthly cash inflows and outflows over a period of time.

A loan to purchase chemicals for crops is generally called:

an operating loan

Which time of accounting adjusts for such things as inventory changes and changes in the value of prepaid expenses and unused supplies?

Accrual accounting

In a set of data, which of the following refers to the number that occurs the most frequently?

Mode

Long-term credit should be used for items such as:

all of these are appropriate for purchase with long-term credit.

A series of payments of principal and interest to repay a loan is called:

amortization

A $25,000 loan is scheduled for repayment over a 10 year period, with equal annual principle payments of $2,500. The loan is said to be .

amortized

Depreciation is best defined as:

an allowance for wear, tear and obsolescence..

What type of firm can issue bonds?

Corporations

What type of firm has limited liability?

Corporations

What type of firm has the biggest percentage of sales?

Corporations

What type of firm has the largest assets in dollar value?

Corporations

The prices of winter wheat, dry beans and corn silage tend to move together in the same direction. What is the statistical term for this?

Correlation

Suppose country A can produce at most 100 of good x or at most 50 of good y. Suppose country B can produce at most 50 of good x or at most 10 of good y. In which goods do countries A and B have a comparative advantage in?

Country A has a comparative advantage in y, country B has a comparative advantage in x

The three R's (Risk, Returns, and Repayment) are frequently evaluated to determine a farmer's:

Credit worthiness

Which of the following is considered Schedule F farm income?

Crop sales

Which items are most readily converted into cash without loss?

Current assets

_____________ are the cash value of assets based on actual cost or market value less sale expenses.

Current values

Assets are items that have a market value. They are separated into three categories which are , ,and .

Current, Intermediate, and Long-term

Thomas needs to borrow money to produce a crop of strawberries. Of the following choices, Is the most logical source.

Production Credit Association

If the Shady Lane Vineyard and Winery were to contract with other growers to raise grapes, which of the following contracting methods will provide Shady Lane Vineyard and Winery the most control over production methods?

Production contract

A market that has a uniform commodity such as corn or soybeans with many buyers and sellers is:

Pure competition

Gives you the right to sell underlying futures at a specific price:

Put option

A higher price tells buyers a product is scarcer and signals the buyer to use less. What function of prices is this?

Rationing function

What is the cash method of accounting?

Records expenses when paid and records income when received

What is the accrual method of accounting?

Records income when earned and records expenses when incurred

Unexpected circumstances where the probability of an event occurring can be empirically determined.

Risk

The act of managing or controlling exposure to risk in order to meet preset objectives or risk exposure guidelines.

Risk Management

The USDA agency that administers the federal crop insurance program is the

Risk Management Agency

A business organization that is structured as a corporation that qualifies for all purposes except taxation is called a(n)...

S Corporation

Which financial institution is specifically designed to make long term farm loans?

The Federal Land Bank

What does stage two in a production function graph determine?

The amount of variable input to use

Purchase of a call option on corn means:

The buyer may, but is not required to buy a corn futures contract at a set price.

Purchase of a call option on corn means:

The buyer may, but is not required to, buy a corn futures contract at a set price.

What is Stage II of the Production Function?

The decision making stage

D. a technique to reduce taxes"

an allowance for wear, tear, and obsolescence

A budget for producing soybeans would be termed:

an enterprise budget.

Ray owns a greenhouse in North Georgia. Two hundred yards away from Ray's greenhouse is a chicken house owned and operated by Marc. On a cold stormy night, part of the roof of the chicken house blew off into the side of the greenhouse and broke a good portion of the glass. This damage allowed the cold temperature to kill all of the Easter Lilies Ray was growing for the Easter holiday. In this case is Marc responsible for the anything?

Yes, Marc is responsible for both the repairs and the Easter Lilies

Which is NOT true for the legal liabilities of a trespasser?

You may shoot an unthreatening trespasser in order to get him off your land.

Which of the following is true concerning trespassers on your land?

You may use reasonable force to remove trespassers.

Speculators in the futures market...

accept the price risk the hedgers are seeking to avoid.

The speculator is important in the futures market because he:

accepts the price risk the hedger is seeking to avoid

A major problem with a task force type of management is

accountability.

An economic profit is equal to

accounting profit-implicit costs.

Agriscience in the United States ________.

accounts for 16 percent of the jobs

Money that is owed to you at the end of the year is termed:

accounts receivable

If someone owes your business money, you would consider this:

accounts receivable.

In order to manage taxes it is necessary to adopt an accounting method that best suits your situation. The method which reports income and expenses by keeping track of inventory levels is called the...

accrual method

Mr. Smith gathered 10,000 bushels of corn from his farm in October, 1985. He stored the corn and later sold it in May, 1986. With the accounting method he uses, he reported the value of the corn as income on his 1985 income tax return. His accounting method is the__________ .

accrual method

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?

accrual method

The unpaid interest (at any time) that would be payable if the loan principal was due.

accrued interest

The main difference between cash and accrual accounting is that accrual accounting includes

adjustments for changes in inventory.

The industry that provides commodities that are basic to life is ________.

agriscience

A tool used to analyze changes in the business operations is ________.

all of the answers listed

An independent contractor:

all of the answers listed

In the marketplace, prices depend on:

all of the answers listed

Many farmers do a considerable amount of custom work. Their reason for doing this is

all of the answers listed

The type of insurance that a borrower should have is ________.

all of the answers listed

Which of the following is not a type bankruptcy?

all of the answers listed

Pollution is an example of

externality cost.

If all other factors remain the same and the supply of a product goes up, then the price of that product will probably:

fall

If all other factors remain the same and the supply of a product goes up, then the price of that product will probably...

fall.

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...

fall.

The buyer of a put option will make money if the future price ________.

falls

The science and art of the organization and operation of farms so as to obtain the maximum amount of continuous net income is the definition for ?

farm management

Johnny was listing his assets for a bank loan. Which item below should be listed with his assets?

farm truck

One often hears that "farmers just can't find anyone to work on farms anymore." What does this indicate?

farm wages are low compared with other alternatives

If one pound of soybean meal will substitute for 1.2 pounds of linseed meal of equal nutritional value and soybean meal sells for 5.2 cents per pound and linseed meal sells for 4 cents per pound, the livestock farmer who wishes to make the largest net profit should:

feed all linseed meal

You have been showing hogs for several years. An example of a variable cost in your established show hog project is

feed.

Which of the following is not a fixed cost?

fertilizer

Which one of the following is NOT a fixed cost?

fertilizer

Short-term credit is generally used to purchase such items as...

fertilizer and seed.

One use of short term credit might be for...

fertilizer applied to crops

A stated advantage of sole proprietorship compared to a corporation is:

fewer legal constraints

Ann was reviewing her old tax returns and discovered that she had made a mistake on her 1984 return and had over-paid her taxes that year. She should . . .

file an amended return.

Net worth is a measure of:

financial position.

The Net Worth Statement is the best measure of:

financial progress over a period of years

Investment spending is unstable because

firms can postpone buying capital because it is durable.

Oligopolies avoid price competition because

firms suffer from mutual interdependence.

One of the most helpful mechanisms for refining a spoken or written communication is called the

five C's.

The money spent to do business. It does not vary with the level of production in the short run.

fixed cost

A farmer can usually separate his costs into variable cost and fixed costs. Which costs must be paid by the farmer even if nothing is produced?

fixed costs

No matter what enterprise is undertaken, _____________ must be paid. It does not vary with the level of production in the short run.

fixed costs

Production costs that do not vary with the level of total production and include items such as taxes and depreciation are called . . .

fixed costs

Total cost of producing a product equals:

fixed costs + variable costs

Items that are least marketable and least readily converted into cash without loss

fixed or long term assets

Items which are least marketable and least readily converted into cash without loss are:

fixed or long term assets

Which items are least readily converted into cash without loss?

fixed or long term assets