farm business 2
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
