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
