Farm & Agribusiness Management CDE

Who is the current Secretary of Agriculture? a. Sonny Perdue b. Tom Vilsack c. Ben Kerry d. Kevin Shea

Kevin Shea is current acting secretary, but Biden has nominated Tom Vilsack

A farmer borrows $200,000 for ten years to purchase a tractor. The loan is fully-amortizing, and the interest rate is 10%. What is the principal balance? a. $0 b. $20,000 c. $100,000 d. $200,000

a. $0

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 Mary's current Assets? a. $75,000 b. $50,000 c. $100,000 d. Not enough information

a. $75,000

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. A mission statement b. A vision statement c. A profit Statement d. A shareholder's guarantee

a. A mission statement

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. An adjusting entry

Which crop produces the most revenue for Nebraska farmers each year? a. Corn b. Soybeans c. Wheat d. Sunflowers

a. Corn

Which product has the most elastic supply? a. Corn b. Soybeans c. Fresh Tomatoes d. Fresh Salmon (fish)

a. Corn

In accrual accounting, what is a "left side" entry also known as? a. Debit b. Debt c. Credit d. Liability

a. Debit

Which of the following is currently used as an input for a cattle feed ration, according to a recent news report? a. Defective Skittles b. Discarded Fast food c. Pinecones d. Grasshoppers

a. Defective Skittles

How can ag producers best help themselves obtain credit (bank loans)? a. Detailed record-keeping b. Dressing Nicely c. Proper Manners d. Punctuality

a. Detailed record-keeping

What is the main advantage of a sole proprietorship? a. Ease b. Tax-savings c. Cash -flow d. Opportunity to add investors

a. Ease

Fixed costs that result from owning farm/ranch assets such as machinery include all but which of the following? a. Fuel b. Depreciation c. Insurance d. Interest

a. Fuel

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. Having Large Cash Reserves

What does the abbreviation "cwt" mean? a. Hundred weight b. Carat weight c. Cold weight d. Counter weight

a. Hundred weight

What is another term for a fixed cost? a. Indirect b. Direct c. Recoverable d. Marginal

a. Indirect

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. Inelastic demand for farm commodities

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. Inflation

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. Inflexible Prices

What day does a calendar year begin? a. January 1 b. December 31 c. July 1 d. July 31

a. January 1

What is the capital of Nebraska? a. Lincoln b. Omaha c. Des Moines d. Hastings

a. Lincoln

At the production quantity where MR=MC, profit is ________ a. Maximized b. Zero c. Negative d. Average

a. Maximized

What river borders Nebraska to the East? a. Missouri b. Mississippi c. Amazon d. Nile

a. Missouri

As corn prices increase, a farmer should use _________ fertilizer, in order to maximize profit. a. More b. Less c. The same amount

a. More

Which of the following states has the highest farm output per person? a. Nebraska b. Iowa c. Illinois d. Texas e. California

a. Nebraska

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. No effect

Which of the following is NOT a financial statement? a. Partial Budget b. Statement of cash flows c. Balance Sheet d. Income Statement

a. Partial budget

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. Persona

a. Production

The __________Function show the relationship between one input and total output. a. Production b. Consumption c. Isoquant d. Isorevenue

a. Production

What crop enterprise is usually grown in rotation with corn? a. Soybeans b. Watermelons c. Apples d. Strawberries

a. Soybeans

In Nebraska, during which season is corn typically planted? a. Spring b. Summer c. Fall d. Winter

a. Spring

What condition exists when the price is higher than the market equilibrium? a. surplus b. shortage c. maximum efficiency d. minimum efficiency

a. Surplus

Day to day management is also known as ________management. a. tactical b. operational c. functional d. Daily

a. Tactical

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. The Farm Financial Standards Council

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 is likely to have greater cash flow? a. The renter b. The buyer

a. The renter

68. 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 d. To calculate earnings per employee

a. To be able to equally evaluate farms with and without "free" family labor

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. True

True/false: A sole proprietorship can have multiple owners (as in a married couple on a farm) a. True b. False

a. True

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 paid the first year? a. Under $20,000 b. $20,000 exactly c. Over $20,000 d. Not enough information

a. Under $20,000

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 lb. of mil. If the price of corn is $.10 per lb. while the price of milo is $.08/lb, the cost minimizing producer would: a. Use all corn b. Us all milo c. Use half corn, half milo d. Use 60% corn and 40% milo

a. Use all corn

Which of the following would not be reflected as Revenue on a Farmer's yearly accrual-based income statement? a. Gain from the sale of a tractor b. $1,000 won in a local charity raffle c. Cash sale of grain harvested during the current period d. Market value of harvested grain, unsold in storage

b. $1,000 won in a local charity raffle

A farmer borrows $1,000,000 to purchase farmland. The loan term is 5 years, and the loan is structured as an "interest-only" loan. The interest rate is 12%. If the farmer is making monthly payments to the bank, what is the principal balance? a. $0 b. $1,000,000 c. $120,000 d. $500,000

b. $1,000,000

Mary buys an asset that qualifies to be depreciated under IRS 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. $46,000

During which decade did farmland prices escalate quickly, leading to the Farm Debt Crisis? a. 1960s b. 1970s c. 1980s d. 2000s

b. 1970s

For most agricultural 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. Constant

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. Ease of use

What type of budget projects the expected revenues and expenses of one production (corn only, for example) unit associated with a farm? a. Partial b. Enterprise c. Pro-forma d. Whole Farm

b. Enterprise

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. False

Farmers and Ranchers should consider sunk costs when making production decisions a. True b. False

b. False

If a farm has negative cash flow, it is bankrupt a. True b. False

b. False

Recently Super Saver raised their donut prices from $.60 to $.88. This is most likely due to inflation. a. True b. False

b. False

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. Fence

What term is used for the increased worldwide trade in agricultural products? a. Global expansion b. Globalization c. NAFTA d. WTO

b. Globalization

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. Growth

Production of commodity corn would embody which type of farming? a. Low-volume, high value production b. High-volume, low margin production c. Custom farming d. Part-time production

b. High volume, low margin production

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. Identify and define the problem or scenario

What farm machinery manufacturer is known for their green paint? a. Allis-Chalmers b. John Deere c. Case IH d. Ford

b. John Deere

What state is directly south of Nebraska? a. Iowa b. Kansas c. Minnesota d. South Dakota

b. Kansas

What type of resource is a shovel? a. Human b. Manufactured c. Natural d. Tangible

b. Manufactured

Which type of risk do forward contracts alleviate? a. Production b. Market c. Financial d. Personal

b. Market

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. Perfect substitutes

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. Principal and interest

In accounting, what does the "matching principle" try to match? a. Cash and expenses b. Revenue and expenses c. Revenue and liabilities d. Owners equity and assets

b. Revenue and expenses

What type of cost has happened in the past, and cannot be recovered? a. Fixed b. Sunk c. Variable d. Direct

b. Sunk

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. The government takes possession of the crop produced in lieu of a monetary payment

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. The operating agreement has a specified end

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. The owner

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. They plan to sell the asset before it is salvaged

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. Whenever cash is exchanged

Which of the following is a commodity? a. Organic Beef b. Non-GMO Corn c. #2 Corn d. A Chevrolet Pickup

c. #2 Corn

A farmer borrows $1,000,000 to purchase farmland. The loan term is 5 years, and the loan is structured as an "interest-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? a. $100,000 b. $120,000 c. $10,000 d. $12,000

c. $10,000

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. $121

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. $8,550,000 c. $550,000 d. $50,000

c. $550,000

How many acres are in one square mile? a. 160 b. 320 c. 640 d. 1000

c. 640

On a balance sheet, what must balance? a. Expenses and revenues b. Cash and Expenses c. Assets and the total of liabilities and owners' equity d. Revenue and liabilities

c. Assets and the total of liabilities and owners' equity

Bill and Ted are partners in a cow-calf operation. Ted tragically dies. 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. Both Bill and Ted, as partners

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. Commodities

What does IRS stand for? a. Independent Revenue Source b. Internal Ratio Structures c. Internal Revenue Service d. I Really Stink

c. Internal Revenue Service

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. Real Estate

What does the "S" in SMART stand for, with regards to goal-setting? a. Smart b. Silly c. Specific d. Strategic

c. Specific

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. State Extension Offices

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. The current cost of the investment and the present value of the future increases in profits

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. The partnership ends when Ted dies.

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 increased 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 decreased

c. There are fewer producers and the average farm size has increased

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. $-3

Approximately what percentage of farms in the United States are considered part time? a. 5% b. 10% c. 15% d. 50%

d. 50%

Which asset is the most likely to have a salvage value of $0? a. A truck b. An ATV c. A combine d. A fence

d. A fence

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. All of the Above

Which of the following could improve negative cash flow? a. Refinancing existing debt b. Limiting family living expenses c. Engaging in a secondary enterprise (or side-hustle as Uber Calls it) d. All of the above

d. All of the above

Which of the following is an example of a market? a. Little Susie's lemonade stand b. Craigslist c. Hy-Vee d. All of the above

d. All of the above

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. B & C

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. Income statement

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. Increase or decrease in direct proportion to the number of units of output

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. Irrigation

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. It guarantees sales at all levels of market prices

If a firm has a current ratio <1, what overall condition is assumed? a. Bankruptcy b. Insolvency c. Illegal activity d. Liquidity problems

d. Liquidity problems

Why is depreciation a "non-cash" 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 paid.

d. No actual depreciation expense is paid.

Which of the following is NOT a function of management? a. Controlling b. Planning c. Implementation d. Profit-seeking

d. Profit-seeking

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. Vitamins and minerals

Which of the following are economic resources used in agricultural production? a. Land b. Labor c. Capital d. Entrepreneurial skill e. All of the above

e. All of the above

Which state in has the highest output (as measured in dollars) of total farm production? a. Nebraska b. Iowa c. Illinois d. Texas e. California

e. California