Farm Business Management Part 1

Which of the following is a commodity?

#2 Corn

At the end of the loan presented in #21, what is the principal balance?

$0

At the end of the loan in #20, what is the principal balance?

$1,000,000

A farmer borrows $1,000,000 to purchase farmland. The loan term is 5 years, and the loan is structured as an "intense-only" loan. The interest rate is 12%. If the farmer is. making monthly payments to the bank, approximately how much is he or she paying each month?

$10,000

Approximately what percentage of farms in the United States are considered part time?

50%

How many acres are in one square mile?

640 acres

Which state has the highest output (as measured in dollars) of total farm production?

California

For most agricultural producers, the marginal revenue of producing one more unit of output is ________.

Constant

Which product has the most elastic supply?

Corn

What does IRS stand for?

Internal Revenue Service

What farm machinery manufacture is known for their green paint?

John Deere

What state is directly south of Nebraska?

Kansas

Which of the following is an example of. a market?

Little Susie's lemonade stand, Craiglist, and Hy-Vee,

Which state has the highest farm output per person?

Nebraska

Ralph currently produces corn and soybeans. He is thinking about going back to graduate school for 5 years. What effect will Ralph's departure have on the market for the commodities he produces?

No effect

What does the "S" in SMART stand for, with regards to goal-setting?

Specific

What entity was established following the 1983-1987 Farm Debt Crisis?

The Farm Financial Standards Council

Over the past fifty years, what has happened to the size and number of farms?

There are fewer producers and the average farm size has increased

It is possible for a farm or ranch to show positive profits on the income statement, but have a cash flow issue

True

The board of directors at "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 reasonable prices, sourced in the most responsible way possible." This is an example of...

a mission statement

Is the renter or buyer likely to have a greater cash flow?

a renter

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?

an adjusting entry

On a balance sheet, what must balance?

assets and the total of liabilities and owners' equity

Which crop produces the most revenue for Nebraska farmers each year?

corn

How can ag producers best help themselves obtain credit (band loans)?

detailed record-keeping

What is the main advantage of cash accounting compared to accrual accounting?

ease of use

In Nebraska, during which season is corn typically harvested?

fall

Which of the following is an asset?

fence

Fixed cost that result from owning farm/ranch assets such as machinery include all but which of the following?

fuel

What term us used for the increased worldwide trade in agriculture products?

globalization

Production of commodity corn would embody which type of farming?

high-volume, low margin production

What does the abbreviation "cwt" mean?

hundred weight

What is the first step in the decision-making problem?

identify and define the problem or scenario

What is another name for a profit and loss statement?

income statement

Variable cost are those costs that...

increase or decrease in direct proportion to the number of units of output

What is another term for fixed cost?

indirect

List the four economic resources used in agriculture production?

land, labor, capital, and entrepreneurial skill

What type of resource is a shovel?

manufactured

What is not a financial statement?

partial budget

A fully-amortizing loan is said to have equal "P" and "I" payments. What do P and I stand for?

principal and interest

The ________ Function show the relationship between one input and total output.

production

What is NOT a function of management?

profit-seeking

In accounting, what does the "matching principle" try to match?

revenue and expenses

What type of cost has happened in the past, and cannot be recovered?

sunk

Day to day management is also know as _____ management

tactical

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?

the owner

A farmer borrows $200,000 for ten years to purchase a tractor. The loan is fully-amortizing, and the interest rate is 10%. How much interest is pair for the first year?

under $20,000

Which would be considered a change in technology, as related to ag production?

utilizing GPS services and air-conditioned combines and tractor cabs

When should a farm shut down production in the short run?

when they cannot recoup any fixed costs, when the price is below the minimum of AVC, and when they would lose more by producing than shutting down

When should accounting transactions be recorded when using a cash accounting system?

whenever cash is exchanged