farm business 2

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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 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

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

Greater than one

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

Net income statement

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

Net worth

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

The degree to which a farm's assets adequately cover or exceed its liabilities 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

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

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

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

(price times yield) minus total operating costs = 0

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

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

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 adjustments to net income?

Change in market value of land

Developing an accrual adjusted income statement requires __________

Developing an accrual adjusted income statement requires __________

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 non-current 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 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

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

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

Would be owed if and when an asset is sold


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