Multiple Choice
Identify the choice that
best completes the statement or answers the question.
|
|
|
1.
|
A historical record of monthly
cash inflows and outflows for a specified period of time is.....
a. | Net worth
statement | c. | Income
statement | b. | Cash flow statement | d. | Whole farm analysis |
|
|
|
2.
|
The two types of accounting
systems are
a. | Single & double
entry | c. | Accrual and cash
entry | b. | Cash and physical property entry | d. | Income & expense entry |
|
|
|
3.
|
Assets minus liabilities equal
______
a. | fixed
assets | c. | total
worth | b. | current assets | d. | net worth |
|
|
|
4.
|
A purchaser sets the price with
a commodity or stock broker to buy stock when it decreases to a certain price is a/an
_______
a. | contract | b. | call | c. | put | d. | deed |
|
|
|
5.
|
An unwritten law that has
developed from social custom, precedence or opinions handed down from our legal
system
a. | contract | b. | free market | c. | monopoly | d. | common law |
|
|
|
6.
|
An agreement to buy and receive
or to sell and deliver a commodity or a future date with certain specified
characteristics.
a. | Forward
contract | c. | hedging | b. | Futures contract | d. | equity |
|
|
|
7.
|
The amount of money received
from selling a product or doing a job
a. | income | b. | inventory | c. | expense | d. | annuity |
|
|
|
8.
|
A business organization that is
run by a board of trustees at the discretion of the controlling stockholders, has a separate legal
identity and is taxed apart from its shareholders.
a. | cooperative | b. | corporation | c. | estate | d. | partnership |
|
|
|
9.
|
A nonprofit business that is
owned and controlled by the members for the mutual benefit of the members.
a. | cooperative | b. | corporation | c. | estate | d. | partnership |
|
|
|
10.
|
A document that shows the exact
size, location, ownership and method of ownership of property
a. | deed | c. | lease | b. | quitclaim deed | d. | warranty deed |
|
|
|
11.
|
The physical count of all
assets in a business.
a. | margin | b. | tax credit | c. | commodity | d. | inventory |
|
|
|
12.
|
The decline in the value of an
asset over its useful life associate with use, age and obsolescence is known as
a. | disposition | c. | salvage value | b. | depreciation | d. | opportunity cost |
|
|
|
13.
|
Value of an asset at the end of
its useful life
a. | Capital
gains | c. | Salvage
value | b. | Depreciation | d. | Opportunity cost |
|
|
|
14.
|
An estimate of costs and
returns
a. | bid | b. | budget | c. | basis | d. | discounted |
|
|
|
15.
|
Insurance provides a means
of
a. | lowering
costs | c. | increasing
profits | b. | reducing risks | d. | increasing assets |
|
|
|
16.
|
A condition that exists when
the quantity supplied is greater than the quantity demanded at a particular
price
a. | Theoretical
capacity | c. | utility | b. | surplus | d. | variable input |
|
|
|
17.
|
The difference between the cash
price and futures price is called
a. | hedge | b. | speculation | c. | basis | d. | forward price |
|
|
|
18.
|
Depreciation is not allowed on
which of the following items
a. | corn
planter | b. | cattle
shed | c. | new
fence | d. | land |
|
|
|
19.
|
A document issued by a grain
elevator for grain delivered for storage is called a
a. | warehouse
receipt | c. | abstract | b. | margin | d. | contract |
|
|
|
20.
|
How many acres would be in the
S.E. 1/4 of Section 8
|
|
|
21.
|
Marginal cost may be defined
as
a. | The cost of another unit of an
input | b. | The same thing as total variable cost | c. | The additional cost of producing another unit of
output | d. | The additional cost of using another unit of
input |
|
|
|
22.
|
The term liquidity refers to
the relationship between
a. | Total assets and total
liabilities | c. | Current assets and
current liabilities | b. | Profit ad loss | d. | Income and expenses |
|
|
|
23.
|
Overhead costs include
everything not accounted for in
a. | Taxes | b. | Rebates | c. | Indirect costs | d. | Direct costs |
|
|
|
24.
|
The term opportunity costs
refers to
a. | The value of the highest or best
forgone alternative | b. | The value of all forgone alternatives | c. | Depreciation expense | d. | Fixed costs |
|
|
|
25.
|
Farmer Jones can either sell
his corn or feed it to his cattle. In deciding which alternatives will yield the highest profit, he
should compare
a. | the price of corn with the price of
cattle | b. | The price of corn minus hauling costs with the increase in value that his
cattle will have after the corn | c. | The cost of hauling corn to the elevator with the cost of hauling heavier
cattle to market | d. | The current price of corn with the cost of storing it six
months |
|
|
|
26.
|
Inflation
means
a. | A dollar will buy more in the future
than it will buy today | b. | The prices at which the interest rate will equal the inflation
ratio | c. | The farmer’s profit margin will increase over time due to higher
prices | d. | The purchasing power of a dollar declines over
time |
|
|
|
27.
|
Marketing is the performance of
all business activities involved in the flow of goods and services from the point of initial
production until they are in the hands of the
a. | Wholesaler | c. | Retail store or processor | b. | Ultimate consumer | d. | Food market |
|
|
|
28.
|
A cash flow budget projected
for the next year can provide information on
a. | Return to the farm operator’s
labor and management | b. | Projected borrowing requirements and repayment
ability | c. | Net worth of the farm business | d. | Rate of return on the farm
investment |
|
|
|
29.
|
A written claim listing the
collateral to secure the loan
a. | market | b. | option | c. | Premium | d. | Mortgage |
|
|
|
30.
|
Investment credit
is
a. | Another method of
depreciation | c. | Used only by
corporation | b. | Credit against your tax liability | d. | Used only by farmers |
|
|
|
31.
|
Life insurance that gives
protection for a limited time and usually costs less per dollar of protection than other policies is
known as
a. | Term
life | c. | Ordinary or whole
life | b. | Limited pay life | d. | Endowment life |
|
|
|
32.
|
Farm Bob does not own, plant or
raise wheat, but has just purchased a futures contract, he is
a. | Bearish | b. | Bullish | c. | Speculating | d. | Hedging |
|
|
|
33.
|
What fraction would be used in
the sum-of-the-digit method for second year depreciation of an asset having an eight-year expect
life?
|
|
|
34.
|
The price of soybeans is
determined by
a. | The supply of soybeans in the market
and the demand for soybeans | b. | The USDA | c. | The farmers who produce them | d. | Cattle feed
lots |
|
|
|
35.
|
Which one of the following
groups of assets may not be depreciated for income tax purposes
a. | Purchased feeder cattle, cropland,
raised breeding livestock | b. | Tractors and plows | c. | Motor vehicles used to produce
income | d. | Calculators and microcomputers used for record keeping and farm
management |
|
|
|
36.
|
A marketing function which
tends to regulate the supply of a product and provide a stable market price is
a. | Assembling | c. | Processing | e. | Transporting | b. | Grading | d. | Storing |
|
|
|
37.
|
An annuity
is
a. | A kind of savings
bond | b. | A retirement plan which pays a constant amount of money each
year | c. | A special kind of term insurance | d. | A method of depreciating machinery and
equipment |
|
|
|
38.
|
Mr. Land Lord just sold a piece
of real estate for $5,000.00. He has purchased the land five years ago for $1,000.00. The profit from
this transaction is
a. | Treated as a capital gain and only
partially taxed by the IRS | b. | Treated as any other profit and fully taxed by the
IRS | c. | Only used in settling the estate upon Mr. Lord’s
death | d. | Ignored since real transactions are not
taxed |
|
|
|
39.
|
The purpose of tax management
is
a. | To minimize the tax
bill | c. | Maximize after tax
income | b. | Improve record keeping | d. | Reduce the chance of audit |
|
|
|
40.
|
Illustrates the gross flow of
and requirements for cash throughout the year
a. | Capital | c. | Opportunity cost | b. | Amortized | d. | Cash flow |
|
|
|
41.
|
Earnings in a cooperative are
usually distributed
a. | On the basis of share holdings by
owners | b. | On the basis of share holdings by patrons | c. | On the basis of
patronage | d. | On the basis of physical volume of
business |
|
|
|
42.
|
The price of product X moves
from $100.00 to $90.00 and, as a result, the quantity demanded increases from 50 to 60 units. From
this we can conclude that
a. | The demand for X is
elastic | c. | The demand for X
is unit elasticity | b. | The demand for X is inelastic | d. | The demand for X has declined |
|
|
|
43.
|
A fully amortized loan is one
for which
a. | The principal is entirely paid off
after all periodic payments have been made | b. | A balloon payment is required to pay off the loan after
all periodic payments have been made | c. | Only interest is paid with each period
payment | d. | Only principal is paid with period
payment |
|
|
|
44.
|
John Murray and Raleigh Jones
own a farm partnership, Raleigh decides that the farm needs two new tractors, so he borrows the money
needed from the bank and buys them without telling John, the partnership later goes out of business.
Who is responsible for the debt incurred on the tractors.
a. | Only Raleigh is because he bought
the tractors | b. | Neither are because the bank cannot collect from a business which no longer
exists | c. | The bank can sell the partnership assets, but cannot hold either Raleigh or
John personally responsible | d. | Both Raleigh and John are jointly and personally responsible for the
partnership debts |
|
|
|
45.
|
When looking at tax management,
what is the best objective to strive for
a. | Minimize the tax
paid | c. | Try to minimize net income after
taxes | b. | Equalize taxes over the years | d. | Pay no taxes |
|
|
|
46.
|
Where larger supplies and/or
poor demand cause a decline in price
a. | budget | c. | cover market | b. | strong market | d. | bear market |
|
|
|
47.
|
The following ratios are
non-real estate asset to non-real estate liabilities. Which ratio indicates the best financial
position.
a. | .25:1 | b. | 1.75:1 | c. | 3.85:1 | d. | 4.35:1 |
|
|
|
48.
|
Income tax for reporting farm
income by farmers filing on either the cash or the accrual method
a. | Form
4797 | c. | Form
1040 | b. | Schedule F | d. | Schedule SE |
|
|
|
49.
|
Measures of farm size would
include which of the following
a. | Total
acres | c. | total work
units | b. | capitol invested per worker | d. | All of these are correct |
|
|
|
50.
|
An increase in the price
of streak
a. | causes a decline in the price of
pork chops | b. | causes consumers to eat more pork and poultry, causing a price increase for
these items | c. | Reflects increased efficiency of pricing
cattle | d. | has no effect on other
commodities |
|