Farm Management
A farmer borrows $200,000 for ten years to purchase a tractor. The loan is fully-amortizing, and the interest rate 10%. How much interest is paid the first year? a. under 20,000 b. 20,000 exactly c. over 20,000 d. not enough information
A
A farmer uses accrual accounting. At the end of the year he or she makes an entry to reflect the use of fertilizer purchased in a different accounting period. What type of entry is this? a. An adjusting entry b. a cash entry c. a non-cash entry d. a limited entry
A
A government "set aside" program incentives farmers by paying them to not produce. Which aspect of the farm "problem" does this address? a. Inelastic demand for farm commodities b. Asset Fixity c. Increased OSHA regulations d. Increasing commodity costs
A
A sole proprietorship can have multiple owners (as in a married couple on a farm) a. True b. False
A
As corn prices increase, a farmer should use ______ fertilizer, in order to maximize profit. a. more b. less c. the same amount
A
Assessing the potential production gains of new technology depends on the manager's ability to evaluate which type of risk? a. Production b. Market c. Financial d. Personal
A
Assume Corn and Milo are perfect substitutes in a feed ration for chickens. The same energy is provided by either 1 lb. of corn or 1.5 of mil. If the price of corn is $.10 per lb. while the price of milo is $.08/lb, the cost of minimizing producer would: a. use all corn b. use all milo c. use half corn, half milo d. use 60% corn and 40% milo
A
At the production quantity where MR= MC, profit is ________. a. Maximized b. Zero c. Negative d. Average
A
Day to day management is also known as ______ management? a. tactical b. operational c. functional d. Daily
A
Fixed costs that result from owning a farm/ranch assets such as machinery include all but which of the following? a. fuel b. depreciation c. insurance d. interest
A
How can ag producers best help themselves obtain credit (bank loans)? a. Detail record-keeping b. Dressing Nicely c. Proper Manners d. Punctuality
A
In Nebraska, during which season is corn typically harvested? a. Spring b. Summer c. Fall d. Winter
A
In accrual accounting, what is the left side entry also known as? a. debit b. debt c. credit d. liability
A
It is possible for a farm or ranch to show positive profits on the income statement, but have a cash flow issue. a. True b. False
A
Joe and Mary's farm has a current ratio of 1.5. If they have $200,000 of liabilities, and $150,000 of those liabilities are long-term, what is the value of Joe and Mary's current Assets? a. $75,000 b. $50,000 c. $100,000 d. Not enough information
A
Nintendo released a miniature version of their classic game console just before the holidays at a price of $60. The console has consistently sold out, and many experts believe there will be a persistent shortage, extending past Christmas. This is an example of a market failure due to what? a. Inflexible Prices b. a price above equilibrium c. a negative externality d. a positive externality
A
Ralph currently produces corn and soybeans. He is thinking about going back to graduate school for five years. What effect will Ralph's departure have on the market for the commodities he produces? a. No effect b. the price of corn and soybeans would both RISE c. the price of corn and soybeans would both FALL d. the quantity of corn and soybeans demanded would rise
A
The ___________ Function show the relationship between one input and total output. a. Production b. Consumption c. Isoquant d. Isorevenue
A
What basic macroeconomic principle is one reason why money earned in the future is worth less than money in the present? a. inflation b. GDP c. unemployment d. recessions
A
What condition exists when the price is higher than the market equilibrium? a. Surplus b. shortage c. maximum efficiency d. minimum efficiency
A
What crop enterprise is usually grown in rotation with corn? a. soybeans b. watermelons c. apples d. strawberries
A
What day does a calendar year begin? a. January 1 b. December 31 c. July 1 d. July 31
A
What does the abbreviation "CWT" mean? a. Hundred weight b. carat weight c. cold weight d. counter weight
A
What entity was established following the 1983-1987 Farm Debt Crisis? a. The Farm Financial Standards Council b. The Association of Agricultural Managers c. The Farm Accounting Standards Board d. The North American Free Trade Agreement
A
What is another term for a fixed cost? a. Indirect b. Direct c. Recoverable d. Marginal
A
What is the capital of Nebraska? a. Lincoln b. Omaha c. Des Moines d. Hastings
A
What is the main advantage of a sole proprietorship? a. Ease b. Tax-savings c. Cash-flow d. Opportunity to add investors
A
What river borders Nebraska to the East? a. Missouri b. Mississippi c. Amazon d. Nile
A
Which crop produces the most revenue for Nebraska farmers each year? a. Corn b. Soybeans c. Wheat d. Sunflowers
A
Which of the following is NOT a financial statement? a. Partial Budget b. Statement of Cash Flows c. Balance Sheet d. Income Statement
A
Which of the following is currently used as an input for a cattle feed ration, according to a recent new report? a. Defective Skittles b. Discarded Fast Food c. Pinecones d. Grasshoppers
A
Which of the following is the simplest precaution against financial, market, and production risk? a. Having Large Cash Reserves b. Always borrowing utilizing balloon loans c. obtaining a limited partner d. converting a sole proprietorship to an LLC or S corp
A
Which of the following states has the highest farm output per person? a. Nebraska b. Iowa c. Illinois d. Texas e. California
A
Which product has the most elastic supply? a. Corn b. Soybeans c. Fresh Tomatoes d. Fresh Salmon
A
Who is the current Secretary of Agriculture? a. Sonny Perdue b. Tom Vilsack c. Ben Kerry d. George Steinbrenner
A
Why is unpaid family labor included in many farm financial ratios? a. To be able to equally evaluate farms with and without "free" family labor b. To limit income tax c. To calculate earnings per worker
A
the board of directors a t "Little Susie's Lemonade Stand" decide to develop a website promoting their product. On the first page of the website they state, "Here at Little Susie's we aim to provide customers with thirst quenching, delicious lemonade at resonable prices, sourced in the most responsible way possible." This is an example of: a. A mission statement b. A vision statement c. A profit statement d. A shareholder's guarantee
A
50 pound salt licks and 100 pound salt licks would be what type of inputs? a. Perfect complements b. Perfect substitutes c. Supplementary d. Competitive
B
A fully-amortizing loan is said to have equal "P and I" payments. What do P and I stand for? a. product and interest b. principal and interest c. plums and iodine d. party and independent
B
Assume two farmers use identical production methods. The only difference is that one producer rents and the other is an owner, but has a mortgage. Which producer will show a higher profit? a. The renter b. the owner
B
Because the IRS determines the useful life of depreciable assets, they must be sold upon the end of the defined useful life a. True b. False
B
During this stage of the life cycle of a farm, the operator is likely to take on risk to expand the operation. a. entry b. growth c. consolidation d. exit
B
During which decade did farmland prices escalate quickly, leading to the Farm Debt Crisis? a. 1960s b. 1970s c. 1980s d. 2000s
B
For most agriculture producers, the marginal revenue of producing one more unit of output is ___________. a. Falling, due to the law of demand b. Constant c. Rising, due to the law of supply d. unknown
B
How is an operating agreement different than a partnership? a. the costs/profits are split in a different way b. the operating agreement has a specified end c. the operating agreement is more permanent than a partnership d. an operating agreement is taxed at the highest of the two operator's tax brackets
B
If a farm has a negative cash flow, it's bankrupt. a. true b. false
B
If a farmer obtains a "non-recourse" loan from the government, how is the loan repaid if crop production does not produce enough revenue to pay back the loan? a. the government forgives the entire loan b. the government takes possession of the crop produced in lieu of a monetary payment c. the government takes ownership of other farm assets d. the farmer takes another government loan to cover the shortfall
B
In accounting, what does the "matching principle" try to match? a. Cash and expenses b. Revenue and expenses c. Revenue and liabilities d. whenever a check is written
B
Mary buys an asset that qualifies to be depreciated under IRA guidelines. It was purchased for $100,000 and has a salvage value of $10,000. Assuming a useful life of 10 years, what is the book value of the asset after 6 years? (assume straight-line depreciation) a. $54,000 b. $46,000 c. $60,000 d. $40,000
B
Production of commodity corn would embody which type of farming? a. low-volume, high value production b. high-volume, low margin value c. custom farming d. part-time production
B
Recently Super Saver raised their donut prices from $.60 to $.88. This is most likely due to inflation. a. True b. False
B
What farm machinery manufacturer is known for their green paint? a. Allis- Chalmers b. John Deere c. Case IH d. Ford
B
What is the first step in the decision-making problem? a. Identify solutions b. Identify and define the problem or scenario c. Collect data d. Make coffee
B
What is the main advantage of Cash accounting compared to accrual accounting? a. less income tax liability b. Ease of use c. For use in management decision d. There is no advantage
B
What term is used for increased worldwide trade in agricultural products? a. Global expansion b. Globalization c. NAFTA d. WTO
B
What type of budget projects the expected revenues and expenses of one production unit associated with a farm? a. partial b. enterprise c. pro-forma d. whole farm
B
What type of cost has happened in the past, and cannot be recovered? a. fixed b. sunk c. variable d. direct
B
What type of human resource is a shovel? a. Human b. Manufactured c. Natural d. Tangible
B
When should accounting transactions be recorded when using a cash accounting system? a. Whenever an expense occurs b. Whenever cash is exchanged c. Whenever a revenue occurs d. Whenever a check is written
B
Which of the following is an asset? a. the account balance at a farm supply store b. Fence c. the sale of corn d. the net worth of the business
B
Which of the following would not be reflected as Revenue on a Farmer's yearly accrual-based income statement? a. Gain form the sale of the tractor b. $1000 won in a local charity raffle c. cash of grain harvested during the current period d. Market value of harvested grain, unsold in storage
B
Which state is directly south of Nebraska? a. Iowa b. Kansas c. Minnesota d. South Dakota
B
Which type of risk do forward contracts alleviate? a. Production b. Market c. Financial d. Personal
B
why would a manager choose to use MACRS or double declining balance as a depreciation method instead of straight-line? a. ease b. they plan to sell the asset before it is salvaged c. to offset income at the end of the asset's useful life for income tax purposes d. to show equal depreciation over the assets useful life
B
A farm has current assets of $50,000, non-current assets of $4,500,000 and liabilities of $4,000,000. What is the value of this farm's owner's equity? a. $4,550,000 b. $8,500,000 c. $550,000 d. $50,000
C
A farmer borrows $1,000,000 to purchase farmland. The loan term is 5 years, and the loan is structed as an "interest- only" loan. The interest rate is 12%. The farmer is making monthly payments to the bank, approximately how much is he or she paying each month? a. $100,000 b. $120,000 c. $10,000 d. $12,000
C
A farmer decides he or she wants to produce coconuts, but does not know where to find any information related to the costs of production. Where could this information be obtained? a. siri b. google c. state extension offices d. it is not available
C
Bill and Ted are partners in a cow-calf operation. Ted tragically dies. What happens to the partnership? a. it continues with Bill as the sole-owner b. It continues with Bill and whomever Ted has passed ownership to c. The partnership ends when Ted dies d. it depends if Bill can get the time-machine phone booth to start working again
C
How many acres are in a square mile? a. 160 b. 320 c. 640 d. 1000
C
If a loan is secured to an asset using a mortgage, what is the security of the loan? a. cash b. equipment c. real estate d. livestock
C
If an industry is perfectly competitive (such as farming), what type of products are sold? a. Utility maximizing b. "needs" c. Commodities d. Differentiated products
C
If you invest $100 for two years at 10% interest, compounded annually, how much do you have at the end of two years? a. $110 b. $120 c. $121 d. not enough information
C
Long before Ted died, he borrowed money using land owned by the partnership to fund a family vacation to Aruba. Ted stayed in Aruba for five years, earning no money. Who is liable for paying back the loan? a. Ted, he took out the loan b. Bill, he was the one who continued to work c. Both Bill and Ted, as partners d. Neither
C
On a balance sheet, what must balance? a. Expenses and Revenues b. Cash and Expenses c. Assets and the total of liabilities and owner's equity d. Revenue and liabilities
C
Over the past fifty years, what has happened to the size and number of farms? a. The number of producers and the average farm size have both increase b. The number of producers has stayed the same, while the average farm size has doubled c. There are fewer producers and the average farm size has increased d. There are fewer producers and the average farm size has decrease
C
What does IRS stand for? a. Independent Revenue Source b. Internal Ratio Source c. Internal Revenue Service d. I really Stink
C
What does the "S" stand for in SMART, with regards to goal-setting? a. Smart b. Silly c. Specific d. Strategic
C
Which of the following is a commodity? a. Organic Beef b. Non-GMO Corn c. #2 Corn d. A Chevrolet Pickup
C
a net present value calculation compares: a. the current cost of the investment to the future value of the investment b. the future cost of the investment compared to the present value of the additional income caused by the investment c. the current cost of the investment and the present value of the future increases in profits d. the interest rate and the discount rate
C
Approximately what percentage of farms in the United States are considered part-time? a. 5% b. 10% c. 15% d. 50%
D
Feedlots production could be described as beef cattle weight gain. Which of the following would be an input for this production? a. Ground Beef b. Pork Loin C. Ribeye d. Vitamins and Minerals
D
How does spreading sales minimize market risk? a. a spreading sale is another name for entering a futures contract b. a spreading sale is another name for entering a forward contract c. it guarantees all sales at the highest part of the market d. it guarantees sales at all levels of market prices
D
If a firm has a current ratio <1, what overall condition is assumed? a. Bankruptcy b. Insolvency c. Illegal activity d. Liquidity problems
D
Suppose a crop consultant estimates there is a 20 percent chance of a major insect infestation, which would reduce your per acre profits by $60. There is a precautionary treatment available, but must be applied by a professional at a rate of $15 per acre. What is the expected value if you have the treatment applied? a. $12 b. $15 c. $3 d. $-3
D
Variable Costs are those costs that: a. change from one year to the next b. occur even if an enterprise is not carried out c. occur only in unusual cases d. increase or decrease in direct proportion to the number of units of output
D
What is another name for a profit and loss statement? a. Statement of Cash Flows b. Enterprise Budget c. Balance Sheet d. Income Statement
D
What is the main technological production difference between corn grown in eastern and western Nebraska? a. the growing b. harvesting equipment c. fertilization d. irrigation
D
When should a farm shut down production in the short run? a. When they cannot recoup any fixed costs b. When the price is below the minimum of AVC c. When they would lose more by producing than shutting down d. All of the above
D
Which asset is more likely to have a salvage value of $0? a. A truck b. An ATV c. A combine d. A fence
D
Which of the following could improve negative cash flow? a. refinancing existing debt b. limiting family living expenses c. engaging in a secondary enterprise d. all of the above
D
Which of the following is NOT a function of management? a. controlling b. planning c. implementation d. profit-seeking
D
Which of the following is an example of market? a. Little Susie's lemonade stand b. Craigslist c. Hy-Vee d. All of the above
D
Which of the following would be considered a change in technology, as related to ag production? a. Farming more acres b. Utilizing GPS services c. Air-conditioned combines and tractor cabs d. B and C
D
Why is depreciation a "noncash" expense? a. it occurs against assets which are not purchased with cash b. the expense is deducted from the principal payment c. the expense is added to the principal payment d. no actual depreciation expense is payed
D
Which of the following are economic resources used in agricultural production? a. Land b. Labor c. Capital d. Entrepreneurial skills e. All of the above
E
Which state has the highest output (as measured in dollars) of total farm production? a. Nebraska b. Iowa c. Illinois d. Texas e. California
E