Multiple
Choice
Identify the letter of the choice that best completes the statement or answers the
question.
|
| 1. | What reduces the value of
money? a. | inflation | c. | cutting it in half with scissors. | b. | deflation | d. | hiding it under a mattress | | | | |
|
| 2. | The two types of accounting
systems that farmers can use for income tax purposes are: a. | formal and informal | c. | cash and accrual | b. | cash and non-cash | d. | on the books and off the books | | | | |
|
| 3. | The purpose of income tax
management is to: a. | simplify your farms revenue and
expenses. | b. | hide as much farm income as possible. | c. | minimize what your send to the Internal Revenue Service. | d. | maximize after tax profits. | | |
|
| 4. | The most common legal structure
of farm businesses in the United States is the: a. | sole
proprietorship. | c. | regular corporation. | b. | partnership. | d. | subchapter S cooperative. | | | | |
|
| 5. | Patrons are: a. | the people that buy and sell commodities on the Chicago Board of
Trade | b. | the owners of a cooperative. | c. | the opposite of matrons. | d. | tax deductions for a
cooperative. | | |
|
| 6. | A legal statement of a
persons wishes concerning the disposal of property after their death is called
a: a. | will. | c. | power of attorney. | b. | trust. | d. | the law of
descendents. | | | | |
|
| 7. | Someone who owns land bordering
a stream is called: a. | darn
lucky! | b. | riparian. | c. | joint tenancy. | d. | fee simple. | | | | | | | | |
|
| 8. | Assets are: a. | always equal liabilities. | b. | what the farm business owes to
creditors. | c. | the same as owners equity. | d. | items that have value. | | |
|
| 9. | The value of a resource in its
next best use is called: a. | variable
cost. | c. | opportunity cost. | b. | marginal
cost. | d. | total cost. | | | | |
|
| 10. | Debt is: a. | the obligation to pay. | c. | owners equity | b. | items that have not market value. | d. | accounts
receivable. | | | | |
|
| 11. | The difference between the book
value or basis of an asset and the sale price of the asset is called a. | profit or loss | c. | capital gain or loss. | b. | positive or negative cash flow. | d. | making money on the
sale. | | | | |
|
| 12. |
At the end of the year, a farmer owes $550
to the local machinery repair shop. It would be shown on the farms balance sheet
as a. | an account payable | c. | a prepaid expense | b. | an account receivable | d. | an asset | | | | |
|
| 13. | A term which has the same
meaning as owners equity is: a. | total asset
value. | c. | net worth. | b. | net farm
income. | d. | total liabilities. | | | | |
|
| 14. | A demand curve represents a
relationship between: a. | total cost and total
value. | c. | price and quantity produced. | b. | price and quantity purchased. | d. | profits and
losses. | | | | |
|
| 15. | A projection of all income and
expenses associated with growing an acre of a particular crop would be called: a. | a partial budget. | c. | a whole farm budget. | b. | an enterprise budget. | d. | a balance budget. | | | | |
|