question

An acre equals

answer

.40 hectares

question

A farmer who wants a real rate of return on his investment of 5% will use what discount rate if he anticipates inflation of 2% per year?

answer

7%

question

An increase in the rate of inflation, everything else equal, will have what impact on the present value of a future stream of income?

answer

Decrease the present value

question

The process of finding the present value of a dollar to be received in the future is known as

answer

discounting.

question

Fred Brown raises corn and feeds it to his hogs. This type of business structure is an example of

answer

vertical integration.

question

If the price of a commodity is too low, the demand will be greater than the supply resulting in a

answer

shortage.

question

A farmer placed too high a value on his land in his closing inventory while al other records were accurate. Net working capital in his record summary is

answer

not affected.

question

When the size of the soybean harvest exceeds locally available farm and elevator storage, what happens to the basis?

answer

Basis widens.

question

The money you must deposit with a broker to insure performance in order to trade in the futures market is called

answer

margin.

question

The short-run supply curve for a firm is identical to

answer

marginal cost.

question

A farm business with declining average total costs has

answer

increasing returns to size.

question

Which of the following is not a type of bankruptcy?

answer

All are bankruptcy chapters

question

The maximum amount that a wife can inherit from her husband without owing any federal estate tax is

answer

unlimited.

question

Many farmers do a considerable amount of custom work. Their reason for doing this is

answer

All of the above

question

Using comparable sales for the purpose of appraising farmland is called the

answer

market approach to appraising.

question

Other things equal, the value of land will be greatest to the farmer who has the

answer

lowest discount rate.

question

The farm return to land, labor, and capital for a year would be found on

answer

the income statement.

question

Which of the following is considered Schedule F farm income?

answer

Crop sales.

question

For the rules of depreciation, which of the following is an example of "listed property"?

answer

A passenger car

question

An LLC (Limited Liability Company) is usually

answer

taxed like a partnership.

question

The main difference between cash and accrual accounting is that accrual accounting includes

answer

an adjustment for changes in inventory.

question

A farmer should issue an IRS Form 1099 for which of the following?

answer

$650 paid to a neighbor for land rent.

question

When required, you must send an IRS Form 1099-MISC to IRS before

answer

March 1.

question

The IRS form use to calculate self-employment tax is

answer

Schedule SE

question

The USDA agency that administers the federal crop insurance program is the

answer

Risk Management Agency

question

Which is not a policy plan for multi-peril crop insurance?

answer

Management Protection.

question

On a crop insurance policy, APH stands for

answer

Actual Production History

question

What type of insurance protects the farmer from lawsuits if he/she is responsible for personal injury or property damage to another person?

answer

Liability insurance

question

Even though corn prices are at record levels, corn farmers still receive from USDA

answer

direct payments.

question

Which of the following should not affect a farmer's decision to store his crop?

answer

What he paid for his grain bin

question

The returns for a farmer who produces his crop under a contract as compared to a farmer who produces none of his crop under contract would be

answer

less variable.

question

For an amortized loan, the amount of interest in the first payment will be

answer

None of the above

question

Crop prices increase, causing Marcia's sales income to increase while leaving her cash operating expenses unchanged. This will cause her capital turnover to

answer

increase.

question

For the tax year 2015, the social security wage base was

answer

$118,500

question

The two primary methods of describing the size and location of farmland are rectangular survey and

answer

metes and bounds.

question

How many acres are in a quarter section of land?

answer

160 acres

question

Which of the following farm items is not eligible to be depreciated?

answer

Raised heifers added to the breeding herd

question

Advantage of incorporating the farm business include all of the following except

answer

simpler record keeping.

question

A decrease in the value of the U.S. dollar relative to the currency of other countries should result in

answer

more costly imports.

question

Carrie Cattlefeeder buys feeder cattle and corn and sells fed cattle. If she wants to be totally hedged in the futures market for her price risk in the coming year, she would be

answer

"short" fed cattle, "long" feeder cattle, and "long" corn.

question

The best indication that a farmer is making financial progress year-to-year is

answer

an increase in net worth on the balance sheet.

question

Farmer Brown has a debt-to-asset ratio of 47%. His debt-to-equity ratio must be

answer

Less than 100%.

question

The maximum amount that can be claimed as a Section 179 expense deduction on your 2015 tax return is

answer

$500,000.

question

A farmer's net returns per acre for establishing alfalfa the first year are negative, but he makes money for each of the next four years before the alfalfa has to be reestablished. In preparing an enterprise budget to compare alfalfa with other crops

answer

he should amortize the establishment year losses over the remaining four years.

question

Which is heavier, a bushel of corn of shelled corn or a bushel of soybeans?

answer

Soybeans

question

When an increase in production of one enterprise causes a reduction in the production of another enterprise, the two enterprises are said to be

answer

competitive.

question

A grain farmer who normally stores his soybeans at a local elevator has decided to use the options market to create a synthetic storage. To do so he will sell his beans at harvest and

answer

buy a call option.

question

The primary goal of income tax management for a farm operator is to

answer

maximize the farm's after tax income.

question

The demand curve shows that the relationship between

answer

price and the quantity demanded.

question

If the total cost of producing 100 units of output is $500 and the average variable cost is equal to $1, then which of the following statements is true?

answer

Average fixed cost is equal to $4.

question

The best measure of a firm's ability to make a short-term loan payment is

answer

current ratio.

question

If the U.S. wheat industry has an inelastic demand curve, a decrease in the amount of wheat supplied to the market would

answer

increase the total revenues for wheat producers.

question

A trader with a long position in the futures market

answer

profits when prices go up, loses when prices go down.

question

Livestock, stored grain, land, and personal property used to secure a loan are

answer

collateral.

question

Which of the following is not a supply shifter for farm products?

answer

consumer income

question

Cooperatives pay patronage refunds according to

answer

amount of business done by patron.

question

For a trader who is short in the market, a standing order to buy should the futures price move above a certain level is called a

answer

stop order.

question

On March 1, Sue borrows $50,000 to be paid back in December and puts it in her checking account. This will cause her current ratio to

answer

Any of the above

question

Interest rates go up, causing Jack's annual interest expense to increase from $12,000 to $14,000. This will cause his rate of return on equity to

answer

decrease.

question

Crop prices decline, causing Marcia's sales income to decline while leaving her cash operating expenses unchanged. This will cause her capital turnover to

answer

decrease.

question

The ability of larger firms to be more profitable than smaller firms in the same industry is an example of

answer

economies of size.

question

If the Chicago Board of Trade website indicates today's open for the July corn futures contract was 372'6, what price is this?

answer

$3.7275 per bushel

question

You are having a good business year and it looks as if taxable income is going to be a lot more than it was last year. Which of the following steps would be the best tax management before the end of the tax year?

answer

Buy $15,000 worth of fertilizer for the next crop year

question

A farmer who buys feeder pigs could use the options market to reduce his price risk by

answer

buying a hog Put option.

question

The demand for food is usually considered an inelastic demand. This implies that for a given percentage change in price,

answer

the percentage change in quantity demanded is less.

question

The demand for an item with many possible substitutes is ________ than the demand for an item with a few substitutes.

answer

more elastic

question

The rate of return to equity will be highest when

answer

the interest rate on borrowed funds is less than the rate of return to assets.

question

Which of the following statements regarding equity is not true?

answer

Equity must always be less than total liabilities.

question

If the supply of a good in inelastic , a 10% change in the price of the good would produce a change in the quantity supplied of

answer

less than 10%.

question

The total consumer demand and producer supply of leechynuts were equal to 1 million nuts when the price was $1 per nut last year. This year the price is $1.25. Which of the following statements is true?

answer

Not enough information given to determine quantity supplied or demanded.

question

You are driving down a Missouri country road, exercising reasonable care, when you run into a stray hog standing on the road. You suffer car damages of $3,500 and the hog (valued at $120) is dead.

answer

The hog owner is presumed to be negligent.

question

For income tax purposes, depreciation charges are

answer

deducted from operating income.

question

Return to management is net cash farm income

answer

minus the value of unpaid labor, depreciation, interest on equity capital, and net inventory changes.

question

Return to operator's labor and management is net farm income

answer

minus the interest on equity capital.

question

The effect of appreciation in an asset's value, such as an increase in land value

answer

is not shown on the cash flow statement.

question

Inflation means

answer

a dollar will buy less in the future than it will buy today.

question

Corn and grain sorghum are substitutes for each other in many livestock feed rations. Assuming they are substitutes, a decrease in the supply of corn would cause the demand for grain sorghum to

answer

shift to the right.

question

Accrued interest on a balance sheet refers to

answer

interest that has accumulated since the last loan payment.

question

A livestock producer wishing to use the futures market to hedge the price of cattle he anticipates selling in the future would initially

answer

sell futures contracts expecting to buy them back when he sells his cattle.

question

Capital used in a farmer's beef breeding herd could be invested in stocks, bonds, land, or some other asset. This illustrates the principal of

answer

opportunity cost.

question

In a livestock enterprise budget prepared on July 1, home-grown feed

answer

should be included, valued at its net market price.

question

The law of supply states that

answer

as product price decreases, a smaller quantity will be supplied.

question

The Universal Soil Loss Equation estimates soil erosion in tons per acre per year = R (rainfall factor) x K (soil erodibility factor) x LS (combination of slope percentage and slope length) x C (crop management factor) x P (conservation practice factor). The P factor for contour farming is 0.5. This indicates

answer

Contour farming reduces soil loss by 50% per acre per year.

question

A deduction that allows an owner or operator to account for the reduction of a product's reserves is called

answer

depletion.

question

Understanding the amount of debt on a net worth statement results in

answer

a smaller debt-to-equity ratio.

question

Which of the following can influence the value of land?

answer

All of the above

question

For tax year 2007, a self-employed individual may deduct _____% of his/her cost for health insurance?

answer

100%

question

As a farmer plants more acres of a crop, which of the following costs is least likely to change?

answer

Average variable costs per acre

question

Average total cost is equal to

answer

(total variable costs + total fixed costs) divided by output.

question

When required, you must send an IRS Form 1099-MISC to the individual paid by

answer

January 31.

question

On a crop enterprise budget that does not include any charges for land, which number corresponds to the maximum amount that a farmer could pay in cash rent per acre in the short run?

answer

Returns above total operating costs

question

On a crop enterprise budget that does not include any charges for land, which number corresponds to the maximum amount that a farmer could pay in cash rent per acre in the long run?

answer

Returns above total costs

question

The main drawback of an adjustable rate mortgage is that

answer

interest rate can increase.

question

The cost of producing one additional unit of output is called

answer

marginal cost.

question

USDA has an FSA office in most rural counties. FSA stands for

answer

Farm Service Agency.

question

Collectively, amino acids are usually called

answer

protein.

question

A 2-wheel drive tractor typically requires more horsepower to pull the same implement as a 4-wheel drive tractor because

answer

2-wheel drive tractors have more slippage.

question

A farmer is solvent if

answer

he has sufficient assets to cover all debts.

question

A Subchapter S corporation can have no more than

answer

100 shareholders.

question

Purchase of a call option on corn means the buyer

answer

may buy, but is not required to buy, a corn futures contract at a set price.

question

Purchase of a call option on corn means the buyer

answer

may buy, but is not required to buy, a corn futures contract at a set price.

question

The disadvantage of leasing a tractor as compared to purchasing is that leasing

answer

decreases you depreciation and capital expensing.

question

The capital gains taxes that would be due should a farmer sell his land is an example of a

answer

contingent liability.

question

Which USDA agency's primary activity is conducting surveys to determine farm, production, prices income, and expenses?

answer

National Agricultural Statistics Service (NASS)

question

Which of the following statements regarding accrued interest is most nearly true?

answer

Accrued interest is not a cash expense until it is paid.

question

Diminishing marginal returns to a factor of production are most likely to occur when

answer

one factor is increased and all others are fixed.

question

A cattle feeder, wishing to use futures markets to hedge the price of slaughter cattle, would at the time of his cattle purchase

answer

sell futures contracts expecting to buy contracts when selling cattle.

question

An increase in the value of the U.S. dollar relative to the currency of other countries should result in

answer

less costly imports.

question

A vicious cold spell in the late spring has wiped out the buds on the peach trees grown in Georgia, a major peach producing state. How will this freeze impact the price received for peaches by Maryland peach producers?

answer

Because of the reduced supply, prices for peaches in Maryland will tend to move upward.

question

The Social Security wage base

answer

does not apply when calculating Medicare taxes.

question

A written agreement by which an owner of property transfers title to someone for the benefit of beneficiaries is a

answer

trust.

question

The price of widgets changes from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. From this we can conclude that

answer

the demand for widgets is elastic.

question

In analysis of a farm, what would you do if a cash flow projection indicated that there would be more expense than income in a certain month?

answer

Use savings, delay expenses, move up sales, or borrow money.

question

Which of the following would not appear on a cash flow statement?

answer

Depreciation expense on a tractor.

question

Frank's beginning balance sheet showed $40,000 in corn stored at the local elevator. Which of these would not explain his ending balance sheet entry of $20,000 corn stored at the local elevator?

answer

All of these could explain the decrease.

question

Frank expects his wheat to yield 40 bushels per acre and sell for $5 per bushel. He has spent $75 per acre on seed, fertilizer, fuel, and chemicals so far as of January 1. It will cost $20 per acre to harvest and deliver the wheat to market. Right now the wheat price is only $4.50 per bushel. His balance sheet asset entry should reflect

answer

the $75 per acre he has spent so far.

question

The self-employment tax rate for Medicare is

answer

2.90%

question

The Kansas City Board of Trade wheat futures contract is for

answer

hard red winter wheat.

question

The total tax deduction for conservation expenses in any tax year is limited to ____% of your gross income from farming for the year.

answer

25%

question

Farmer Jones has less current assets than current liabilities. Her current ratio is

answer

between 0 and 1.

question

Economists use elasticities to relate the percentage change in one variable to the percentage change in another variable. The cross-price elasticity of demand estimates the impact on the demand for a good with respect to the change in the price of another good. A positive cross-price elasticity indicates the two goods are

answer

substitutes.

question

The own-price elasticity of supply estimates the impact on the quantity of a good supplied by a change in the price of the good. Normally, one would expect the own-price elasticity of a supply to be

answer

positive.

question

The income elasticity of demand estimates the impact of a change in income on the demand for a good. For normal goods, the income elasticity of demand is

answer

positive.

question

How many square feet are in an acre?

answer

43,560

question

The term "exchange rate" refers to

answer

how much of one currency is needed to acquire a unit of another currency.

question

A cord is a stack of wood measuring

answer

4' x 4' x 8'

question

A procedure for expressing future cash flows in today's dollars is called

answer

discounting.

question

Farmer Brown has a debt-to-asset ratio of 53%. His debt-to-equity ratio must be

answer

Greater than 100%.

question

For an amortized loan, the present value of the loan payments discounted at the loan's interest rate is equal to

answer

the amount of money borrowed.

question

Farmer Johnson has a rate of return on assets of 9% when assets are valued using the cost method, and a rate of return on assets of 5% when the assets are valued using market valuation. This means that the value of assets using the cost method

answer

is less than the market valuation.

question

To consider the time value of money in analyzing alternative farm investments, one should choose the investment with the

answer

highest net present value.

question

You can claim a tax deduction for a charitable contribution of $_____ or more if you have a written acknowledgment from the charitable organization.

answer

$250

question

Total interest to be paid over the life of an amortized loan equals

answer

number of payments time size of payment minus amount borrowed.

question

A metric ton weighs

answer

2204.6 pounds.

question

A hectare equals

answer

2.47 acres

question

The CME live cattle futures contract is for ____ pounds of fed cattle.

answer

40,000

question

In legal terminology, an agent has one's

answer

authority to transact business.

question

How many bushels of corn are in a metric tonne?

answer

39.4

question

If inflation causes both cost and income to increase by 10%, then you would expect profits to

answer

increase by 10%.

question

How many fluid ounces are in a gallon?

answer

128

question

The net business profit for a year would be found on

answer

the income statement.

question

Changes in price within a year, which tend to follow the same pattern over time, are called

answer

price seasonality.

question

A corn futures contract at the Chicago Board of Trade is for

answer

5,000 bushels

question

By contributing the maximum amount to a Roth IRA, a 40-year-old farmer will reduce his taxable income by

answer

$0.

question

The "c" in "cwt" stands for

answer

100.

question

What USDA agency administrators income support programs for a crop farmers?

answer

FSA

question

When a farmer borrows money to purchase land, he usually must offer the title to the property as security until the debt has been repaid. This credit instrument is commonly referred to as a

answer

check.

question

The main difference between a joint tenancy and a tenancy in common is

answer

the surviving joint tenant will eventually own all of the land as a result of the right of survivorship.

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