FBM - Test B

Which of the following would NOT appear on a cash flow budget?

Inventory change

Developing an accrual adjusted income statement requires __________ .

Inventory records, cash revenues and cash expenses

An advantage of using the value of working capital instead of a cash flow budget is to analyze a farm's liquidity would be that __________ .

It is simpler to calculate

A tool used to analyze change in the business operation is __________ .

An income statement, A profit and loss statement, A partial budget

A balance sheet contains the following items:

Assets and liabilities

A balance sheet will list which of the following items?

Assets and liabilities

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

At a particular point in time

When preparing a cash flow budget it is important to __________ .

Take into account the expected timing of cash inflows and outflows

The term Debt Coverage Ratio measures __________ .

The ability to pay all intermediate and long term debt payments

Principal is __________ .

The amount of money actually borrowed from a lender

The cost value of intermediate and long-term assets is equal to __________ .

Cost of the asset, plus cost of improvement that lengthens the life of the asset minus depreciation

An enterprise budget __________ .

shows the expected returns and costs associated with a specific production activity

An enterprise budget is __________ .

A statement of projected costs and returns associated with one production process, and usually in one production period

A cash flow budget can be used to monitor the farm business by __________ .

Comparing actual cash inflows and outflows to the budgeted monthly cash flows

If a business has working capital greater than $0, its current ratio will be __________ .

Greater than one

Which of the following is a measure of economic efficiency?

Gross revenue per year of labor

Which type of financial statements would be most useful for keeping record of expenses?

Net income statement

Which type of financial statements would be most useful for keeping records of expenses?

Net income statement

Another term which has the same meaning as owner's equity is __________ .

Net worth

The net worth statement or balance sheet reveals __________ .

Net worth by subtracting total liabilities from total assets

Another name for a balance sheet is __________ .

Net worth statement

Another term for net worth is __________ .

Owner equity

The net worth statement or balance sheet reveals __________ .

Owner equity by subtracting total liabilities from total assets

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

Which of the following assets would have the same value using either a cost or a market based valuation?

Prepaid expenses

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

Principal payments

Which of the following is NOT included as an expense on the net farm income statement?

Principal payments made on loans

A projected negative annual cash flow indicates __________ .

Projected cash inflows are less than projected cash outflows

A cash flow analysis of an investment in a new capital asset should include projections for __________ .

Several years

The degree to which a farm's assets adequately cover or exceed its liabilities is referred to as __________ .

Solvency

The degree to which a farm's assets adequately secure its debts is referred to as __________ .

Solvency

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

Statement of cash flow

Which of the following financial statements helps managers understand the sources and uses of cash?

Statement of cash flows

Which of the following does NOT analyze the solvency of the farm business?

Turnover ratio

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

(price times yield) minus total operating costs = 0

An organized list of the value of all assets and all liabilities used by an accounting system is called __________ .

A balance sheet

Paying a seed dealer a sum of money in December to be applied toward seed to be delivered in the spring would show up on a balance sheet as __________ .

A prepaid expense

The current ratio is a measure of a farm firm's __________ .

Ability to pay short-term credit obligations

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

What type of liability is "interest on short term loans"?

Accrued liability

Of the following, which is the most liquid asset?

Balance in checking account

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

Balance sheet

Which financial statement asses a specific point in time rather than a period of time?

Balance sheet

Which financial statement covers only a single point in time rather than a period of time?

Balance sheet

Which of the following lists the four basic financial statements?

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

The original purchase price for land is considered its __________ .

Basis

Partial budgets are useful in evaluating changes such as __________ .

Buying new equipment or machinery

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

Capital gains

Which of the following items on a balance sheet would NOT be considered when making accrual adjustment to net income?

Change in market value of land

Which of the following items on a balance sheet would NOT be considered when making accrual adjustments to net income?

Change in market value of land

A projected negative cash balance at the end of the year can be made positive by __________ .

Delaying proposed purchases of capital assets, Carrying over less inventory of stored grain to the following year, Lengthening repayment periods on term loans

A cash flow budget should contain all of the following items except __________ .

Depreciation

A ranch that just replaced a large number of fences and corals would most likely see which of the following ratios increase?

Depreciation expense ratio

A ranch that just replaced a large number of fences and corrals would most likely see which of the following ratios increase?

Depreciation expense ratio

Which of the following farm business analysis measures is NOT a measure of efficiency (either physical or economic)?

Dollars received per ton of hay sold

A cash flow budget can be used to __________ .

Estimate when and how much money will need to be borrowed during the year, Estimate when and how much debt can be repaid during the year, Estimate when excess cash may be available so plans can be made to invest it

The last step in constructing a cash flow budget should be __________ .

Estimating how much new current debt will be needed and can be repaid each month

Which of the following is a noncurrent asset?

Feed inventory

Which of the following would appear on an income statement but NOT on a cash flow budget?

Gain or loss on sale of capital asset, Inventory changes, Depreciation

A farm's asset turnover ratio measures __________ .

How much gross revenue is generated for each dollar invested in farm assets

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

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

The best description of a business which has increased its debt/asset ratio is one which has __________ .

Increased its debt relative to total assets

If the debt/asset ratio is increasing, then the debt/equity ratio will be __________ .

Increasing

Which of the following best describes a balance sheet?

It shows assets and liabilities at a point in time.

Which of the following is an example of a noncurrent liability?

Loan on farm machinery

A lender would usually prefer to have farm assets valued at their __________ value on a balance sheet that is part of a loan application.

Market

Current farm assets are typically valued at __________ .

Market value

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

Monthly bank statement

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

Monthly bank statements

Which of the following is an example of a current asset?

NONE of the above

The "cost" value of farmland can change due to __________

The cost of nondepreciable improvements made, such as terraces and earthen dams

When the value of livestock production per $100 feed fed is greater than 100 it means that __________ .

The livestock enterprise had a negative profit

Return on investment is __________ .

The net profit or net loss realized from an investment or assets

The "cost" value shown on a balance sheet for an asset such as a tractor is equal to __________ .

The original purchase price less depreciation expense taken to date

Rate of return on assets is __________ .

The perfect return on the total amount of money invested in total assets

A statement of owner equity shows __________ .

The sources and amounts of changes in owner equity

The size of the minimum cash balance a farm business should try to show at the end of each budgeting period will depend on __________ .

The total dollars of cash inflows and outflows projected

A "contingent" or "deferred" income tax liability is one that __________ .

Would be owed if and when an asset is sold