2019 Multiple Choice quiz Farm Business Management

This financial statement explains changes in net worth.

• balance sheet

• statement of owner equity

• income statement

• statement of cash flows

What could you do if the cash position in a certain month indicated that there would be more expenses than income?

• terminate the enterprise causing the cash flow problem that month

• switch accounting methods

• move up sales

• change depreciation methods

Three financial indicators that can be calculated from the net worth statements are liquidity, solvency, and equity.  Solvency is the:

• ability of all assets, if sold at market value, to cover all debts.

• ability of a business to generate enough cash to pay bills without disrupting business.

• amount of cash received by a farm business in a one-year period.

• amount of money that will need to be borrowed to cover expenses.

The price of beef is determined by the supply of beef and the demand for beef.  A change in price occurs when the demand for beef increases or decreases even though the supply remains constant.  Which of the following causes a change in demand for beef?

• decrease in the number of cattle

• increase in the number of beef cattle producers

• increase in the cost of producing beef

• decrease in the income of beef consumers

A farm business where it can be exposed to changes in demand and therefore changes in price that is totally beyond its control is referred to as being:

• a price maker.

• a price taker.

• price neutral.

• profitable.

Net farm income from operations for a sole proprietorship business refers to:

• total market value assets minus total liabilities.

• current assets minus current liabilities.

• accrual adjusted revenues minus accrual adjusted expenses.

• cash income minus cash expenses.

When a farmer writes a check for $5,000 to pay off the remainder of a machinery loan:

• assets, liabilities, and equity each decrease.

• assets and liabilities decrease and equity is not affected

• liabilities decrease and equity increases.

• assets and equity decrease.

By dropping hay sales from a beef cattle operation, a producer becomes more:

• specialized.

• integrated.

• motivated.

• diversified.

When a farmer increases his investment in land, buildings, and equipment without increasing the total units of production, cost per unit:

• increases.

• remains the same.

• decreases.

• varies with the operator.

A farmer has determined that his total variable cost per acre for corn will be approximately $248.  His fixed cost per acre is $95 per acre.  If he is raising 2,500 acres of corn and expects a yield of 125 bushels per acre, what is his breakeven price per bushel?

• $0.63

• $2.40

• $2.74

• $18.52