Farm Business Management Practice Exam

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• Which of the following causes a change in beef demand when consumer income changes?
• In the marketing example, the professional consulted by the farmer's son is the
• What percent of the farm's total liabilities are due and payable in the next 12 months?
• Which form of business has replaced S corporations as the most popular for new companies in recent years?
• The law of demand states that, at any given moment, a rational consumer will:
• Which form is the easiest to form and usually has a single owner?
• To hedge future cattle prices using futures, the Crabtrees would initially:
• A cash flow projection is defined as:
• Which financial statement is used to analyze the profitability of the farm?
• When preparing an annual budget for a corn production enterprise, land ownership costs are considered to be:
• Net worth represents what in farm accounting?
• Which of the following describes a Limited Liability Company (LLC) in terms of taxation and liability?
• If a farm has current assets of 200,000 and current liabilities of 100,000, the current ratio is which?
• What are the three basic types of goals in farm planning?
• The simplest business organization to form is which?
• Speculators in the futures market typically:
• Which statement is true?
• The right to sell an underlying futures at a specific time is:
• If a corn farmer yields 200 bushels per acre, total fixed costs are $150 per acre and total variable costs are $250 per acre, what is the total cost per bushel?
• What term describes a form of property ownership in which the holders of legal title manage property for the benefit of others?
• In which business structure are a board of directors elected by member-owners and a manager hired to oversee day-to-day operations?
• Which statement is true?
• Which cost category is typically associated with long-term ownership and investment in farm assets?
• An increase in consumer income, with other factors constant, would cause beef demand to
• Which of the following is most likely to be known at the time an option is purchased?
• A business structure that can issue two types of stock to investors is which?
• What does a futures contract create?
• A net capital ratio measures which aspect of the farm's finances?
• If the expected corn basis in December is $0.30 per bushel and the December futures price is $3.20, what is the expected December cash price?
• In the example, the delivery month for corn is November.
• The curve in a graph that shows the different combinations of price and the quantity a buyer is willing and able to purchase is called:
• Which measure describes how effective the farm is at generating revenue from production and management decisions?
• A futures contract is primarily used to:
• When the size of the soybean harvest exceeds locally available storage, what happens to the basis?
• The four factors of production include:
• The right to sell a futures contract at a specific price is known as:
• Which statement is true?
• Express 0.67 as a percentage.
• A business created by associates who share a common need or interest is called?
• Which statement best describes the difference between physical records and financial records?
• Which of the following would be included on an accrual income statement but not a cash income statement?
• What is the most important item to complete when forming a partnership?
• The largest disadvantage of a partnership is which of the following?
• Which of the following is true about S corporations?
• What are the owners of a Limited Liability Company called?
• Which of the following is an advantage of a partnership related to management?
• Which of the following is an example of partial budgeting?
• Opportunity cost is defined as:
• The principal purpose of a hedger using futures contracts is to:
• What should the Crabtrees do to provide protection from rising soybean meal prices if they plan to buy in May next year?
• A soybean farmer who uses futures contracts to protect against future price declines is referred to as a:
• What is the farm's working capital?
• What price did the hog futures hedge begin at when the farmer sold December hog futures in March?
• Which statement is true?
• Profits generated by the business are distributed to members through patronage dividends. This describes which business form?
• Depreciation on machinery is described as:
• Which statement is true?
• Which of the following statements is true about adaptability in partnerships?
• Double taxation is a disadvantage of which business structure?
• Which item is typically included under liabilities on a net worth statement?
• Fixed costs per acre are given as $150 and variable costs per acre as $250. What percentage of total cost per acre is fixed?
• A strong current ratio for a farm business would be which of the following?
• If a farmer wanted to explore whether she should add a crop enterprise to the dairy farm, she should complete a:
• Which budgeting method would you use to plan and compare the performance of all farm activities across the year?
• Which structure typically includes both general partners and limited partners?
• What are the three types of budgets listed?
• Which stage moves goods from producers toward retailers?
• Which is the final stage in the five-stage production–marketing system?
• Profit for the business is calculated as which?
• In which structure may one or more partners be strictly financial investors?
• Which business structure has profits taxed at the corporate level rather than passing through to individuals?
• What relationship does a demand curve illustrate?
• Which of the following is an advantage of a farm corporation regarding ownership transfer?
• Principal payments on debt would be included directly on which financial statements?
• Which entity requires Articles of Organization to be filed with the Secretary of State?
• On what date was farmland's market value used to determine capital gains in this scenario?
• The three types of budgets mentioned are:
• Which statement is true?
• Which tax treatment applies to LLCs by default, with income passing through to owners' personal tax returns?
• Net worth is calculated by which formula?
• Which of the following is considered a fixed cost?
• Which business structure would terminate at the death of a key person?
• The instrument that gives the holder the right to sell an underlying asset at a specified price by a certain date is called a:
• Which statement best describes equity in a farm business?
• The ultimate user of a product is called
• Which form has shared management and responsibilities as a key benefit?
• How many people are typically involved in a partnership?
• Enterprise accounting:
• What is the 2009 operating expense ratio for FFA farm?
• Which of the following is an advantage of a partnership in terms of resource pooling?
• Which of the following is a listed disadvantage of a corporation related to credit?
• In the marketing chapter example, what is the farmer's son's name?
• Which statement is true?
• Which of the following is described as a simple arrangement with no forms to complete or file?
• The farm's market value net worth changed by what percentage from a year ago?
• Which statement is true?
• Which measure best describes the farm's long-term financial health and stability by comparing assets and liabilities?
• Which statement is true about inventory?
• The basis in commodity marketing is defined as which of the following?
• A hedger who expects to sell a commodity in the future would typically take what futures position to lock in a selling price?
• Which describes the effect of a larger crop on the market supply curve?
• Which statement is true?
• Which business structure may offer two types of stock to its investors?
• Which statement is true about the farm manager's role?
• An artificial legal entity created under state law is known as what?
• The specific price at which a put option buyer has obtained the right to sell is called:
• Total Farm Equity divided by total farm assets is known as which ratio?
• Which document must be filed to legally form an LLC?
• A business structure that is created and taxed like a partnership but has limited liability like a corporation is known as what?
• Which form of business structure is most common in the United States?
• Most agricultural purchase organizations for feed, seed, and fertilizer are what form of business structure?
• For monitoring profitability by product line, a farmer would use which accounting method?
• Which statement is true?
• Which metric would you use to assess the ability to meet short-term obligations with current assets?
• What was the farm's net worth on January 1, 2010 using cost values for assets?
• In futures markets, which participants are more likely to accept price risk to profit from movements in prices?
• Which of the following is an advantage of a farm Limited Liability Company?
• A business is solvent if:
• A non hedged, cash sale of soybeans will likely be a better marketing alternative than using futures contracts if the cash price of soybeans
• Which instrument is designed to discover prices for a future time period rather than for immediate delivery?
• A projected cash flow statement shows future...
• The price where consumers are willing and able to buy all that the producers are willing and able to supply to the market is called the:
• Which document projects cash inflows and outflows for the coming year to assess financing needs?
• Which of the following is an advantage of a partnership in terms of financial resources?
• Patronage dividends are associated with which type of organization?
• The ability of the business to generate enough cash to pay bills without disrupting operations is known as which concept?
• The arrangement where Farmer Jones agrees in May to sell corn in November at a delivered price of $3.50 per bushel is an example of a
• In a cooperative, profits are distributed back to the owners in the form of what?
• If total farm equity is 350,000 and total farm assets are 500,000, the equity to asset ratio is which value?
• If a marketer is said to be “bullish”, they
• Which statement correctly distinguishes cash accounting from accrual accounting?
• Which statement best defines equilibrium price?
• The profit maximizing rule is to set:
• Repayment capacity is best measured by which financial statement?
• If the demand for a commodity increases while supply remains unchanged, what happens to the equilibrium price?
• The amount of a business owner's money currently invested in their own business is referred to as what?
• Which of the following is not a cash inflow component of the cash flow form for the farm?
• Which statement is true about record keeping steps?
• Which of the following is NOT listed as a disadvantage of a corporation?
• Which statement is true?
• A statement of projected costs and returns associated with one production process, usually for one production period is called:
• Which of the following lists the four factors of production as presented?
• Identify two reasons a farm manager must keep good financial records.
• The debt-to-equity ratio using market values (0.57) indicates which of the following about the relation of debt to equity?
• Which statement best distinguishes a cash flow projection from a cash flow summary?
• Using market values, what is the farm's ratio of total debt to equity?
• If FFA farm sold its farmland for its estimated market value on 1/1/2010, how much capital gain would be taxed?
• Which business organization would continue to exist as a separate legal entity even if key people die or sell out?
• Which stage of the production–marketing system is specifically associated with selling goods to consumers?
• Which statement best describes assets on a net worth statement?
• In March, a farmer sells December hog futures at $40.00 to hedge future hog sales. In December, the farmer buys back the futures contract at $36.00 and sells hogs in the cash market at $37.00. What is the net price received by the farmer (ignoring all commission fees)?
• Which ratio measures profitability relative to owners' equity?
• A cash flow summary is best described as:
• Identify one advantage of a farm corporation over a sole proprietorship or partnership.
• The price paid to purchase an option is called the
• Marketing is defined as protecting against price risk and planning, organizing, directing and handling of agricultural products. Which option best reflects this definition?
• Which budgeting tool focuses on how a proposed change in production could affect net income?
• In the futures market, hedgers and speculators differ in that:
• Which form typically has perpetual existence and is often used to raise capital by issuing stock?
• Which of the following is NOT listed as a method to forward price a farm commodity?
• The funds deposited with a broker to fund the trading of futures contracts are called
• Which of the following statements describes liability in a corporation's context?
• What is the total operating expense ratio value as a decimal?
• Who pays the income tax in a Limited Liability Company?
• Which market structure describes many buyers and sellers trading in a uniform commodity like wheat or corn?
• What are the two types of accounting systems used in farm business management?
• Which set of farm financial ratios is commonly used to measure financial efficiency?
• Basis is defined as the difference between which two prices?
• Identify a way an LLC may be dissolved.
• What is the general economic term used to describe where and when buyers and sellers interact regarding a specific product?
• Which of the following is a requirement for an S corporation?
• Which statement is true?
• Partial budgeting comprises which four elements?
• What is the net capital ratio for FFA farm?
• Which of the following is considered a variable cost in farm budgeting?
• A physical and financial plan for the entire farm business for a specific period of time is called the:
• Which set correctly lists the three functions of the farm manager?
• Due to favorable weather, a larger than normal crop of grain is produced. This will result in a shift in the:
• Which form of business can have an unlimited number of stockholders?
• From the NFI statement, what was the farm's cash net farm income before adjustments?
• Which form is a distinct legal entity created under state law, capable of owning property and suing or being sued?
• Basis in the futures market is the difference between:
• A tool used in analyzing only changes in the farm operations and the potential changed in net income is called:
• What are the three parts of a net worth statement?
• Trusts that take effect during the grantor's lifetime are known as what?
• A cash flow budget projected for the next year can provide information on...
• Which form is commonly used by agricultural groups to pool resources for purchasing and marketing?
• A contract that calls for delivery of a described commodity at a future time and is used to discover prices for that later period is a:
• If the current cash price is 90 and the futures price for the same delivery month is 92, the basis (cash minus futures) is:
• Which statement best describes the primary purpose of marketing in agriculture?
• A measurement of what percent of the total assets is owed to creditors is which ratio?
• What term is used for the owners of a Limited Liability Company?
• A farmer wants the right, but not the obligation, to sell a futures contract for a commodity at a specified price level would use a:
• The income adjustment for crops held indicates that by the end of 2009, compared to the beginning of 2009, the change could be which of the following?