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WorksheetsA. Concepts to Use & Analyze Records & Manage Resources
Total questions: 93
Worksheet time: 5hrs 43mins
Which financial statement lists cash receipts and expenses of a farm during a specified time period?
Statement of cash flow
Income statement
Balance sheet
Statement of owner equity
What are the four basic financial statements?
Balance sheet, income statement, checking account, statement of owner equity
Balance sheet, income statement, checking account, monthly bank statement
Balance sheet, income statement, statement of owner equity, statement of cash flow
Balance sheet, monthly bank statement, statement of owner equity, statement of cash flow
This financial statement lists assets, liabilities, and owner equity at a particular time.
Income statement
Statement of owner equity
Statement of cash flows
Balance sheet
This financial statement makes adjustments to cash receipts and expenses of a farm during a specified time period to arrive at net farm income during operations.
Statement of cash flow
Income Statement
Balance sheet
Statement of owner equity
Which of the following is NOT one of the basic financial statements?
Monthly bank statements
Income statement
Statement of cash flow
Statement of owner equity
A balance sheet contains the following items:
Revenue and costs
Receipts and expenses
Assets and expenses
Assets and liabilities
Inventory changes in the value of prepaid expenses would be used to calculate _.
Deprecation
Gross cash income
Accrual adjusted net farm income from operations
Net cash income from operations
Current farm assets are typically valued at _.
Net worth
Market value
Assessed value
Market price
The Net Worth Statement of the Balance Sheet shows the financial condition of a business _.
For a calendar year
At a particular point in time
At a period of time defined by the creator
For the accounting period
While financial records are critical to the management of a business, in order to have a complete understanding of the business, managers also need _.
Input records
Physical records
Machinery records
Magnetic disk
The financial statement that measures the profit of a business is the _.
Statement of owner equity
Statement of cash flows
Balance sheet
Income statement
Expenses that would be accounted for on an income statement include all of the following except:
Fertilizer
Fruit purchases
Principal payments
Part-time hired labor
An enterprise budget _.
Is the tool in analyzing only changes in the business operations
Is a physical and financial plan for the entire farm business for a specified period of time
Shows the expected returns and costs associated with a specific production activity
Is a record of past performance
The formula used to calculate break-even prices to cover total operating costs is _.
Total operating costs plus (price times yield) = 0
(price times yield) minus total operating costs = 0
(price times yield) minus total cost = 0
total cost minus (price times yield) = 0
A tool used to analyze change in the business operation is _.
An income statement
A profit and loss statement
A partial budget
All of the above
For capital assets the difference between purchase price and the sales price is taxed as _.
Capital deductions
Capital returns
Capital gains
Expansion of net worth
The original purchase price of land is considered its _.
Acquisition
Basis
Depreciation value
Net income value
The net worth statement or balance sheet reveals _.
Owner equity by subtracting total liabilities from total assets
Net farm income by subtracting total expenses from total revenues
Cash income by subtracting total cash expenses from total cash receipts
The increase in retained earnings by subtracting total liabilities from total assets
Developing an accrual adjusted income statement requires _.
Inventory records, cash revenue, cash expenses
Depreciation records, cash revenue and cash expenses
Inventory records, cash revenue and depreciation records
Inventory records, cash expenses and depreciation records
What type of liability is "interest on short term loans"?
Deferred liability
A prepaid liability
Accrued liability
Ending liability
Principal is _.
Also known as the present value of a uniform series
The amount of money actually borrowed from a lender
A standard or a rule that guides behavior
The amount of money you actually repay at the end of a loan transaction
Rate of return on assets is _.
What you get from letting the farm use all of your capital assets including equity
What you have left over once you've paid all debt
The total of all assets divided by total liabilities
The perfect return on the total amount of money invested in total assets
Return on investment is _.
The net profit or net loss realized from an investment or assets
Always going to be a positive number
A number that represents your ability to meet all debt
Something that agriculturists never figure because it's always too low
The cost value of intermediate and long-term assets is equal to _.
Cost of the asset, plus cost of improvement that lengthens the life of the asset minus depreciation
Cost of the asset, minus cost of improvements that lengthens the life of the asset minus depreciation
Cost of the asset, minus cost of improvements that lengthens the life of the asset plus depreciation
Cost of the asset, plus cost of improvements that lengthens the life of the asset plus depreciation
Another term for net worth is _.
Net return
Net farm income
Owner equity
Owner value
Which financial statement helps managers understand the sources and uses of cash?
Statement of cash flow
Balance sheet
Income statement
Statement of owner equity
Partial budgets are useful in evaluating changes such as _.
The useful life of an asset
Buying new equipment or machinery
The cost of borrowing
Statement of cash flow
The term Debt Coverage Ratio measures _.
The term, listed in months, required to cover debt
The number of years needed to pay down intermediate and long term debt
The ability to pay all intermediate and long term debt payments
The ability to pay down debts over a given term
Which of the following is an example of a non-current liability?
Farm machinery
Loan on feeder livestock
Loan on farm machinery
Prepaid expense
Which of the following is an example of a current asset?
Dairy cows
Farm buildings
Farm machinery
None of the above
Another term which has the same meaning as owner's equity is _.
Net worth
Net farm income
Total asset value
Total liabilities
Of the following which is the most liquid asset?
Farm machinery
Balance in checking account
Breeding livestock
Feeder livestock
If a business has working capital greater than $0, its current ratio will be _.
Less than one
Less than zero
Greater than one
Greater than zero
If the debt/ratio is increasing, then the debt/equity ratio will be _.
Increasing
Decreasing
Constant
Indeterminate, need more information
What best describes a balance sheet?
It shows changes in assets and liabilities over the last accounting period
It shows changes in assets and liabilities over a period of time
It shows assets and liabilities at a point in time
It shows profit for the last accounting period
The best description of a business which has increased its debt/asset ratio is one which has _.
Purchased more assets
Sold some assets
Increased its debt
Increased its debt relative to total assets
Which of the following assets would have the same value using either a cost or a market based evaluation?
Land
Machinery
Prepaid expenses
Purchased breeding livestock
The degree to which a farm's assets adequately cover or exceed its liabilities is referred to as _.
Liquidity
Solvency
Efficiently
Profitability
A statement of owner equity shows _.
A list of all assets and liabilities
The valuation adjustment for owner equity
Owner equity for the past 20 years
The sources and amount of changes in owner equity
Which financial statement covers only a single point in time rather than a period of time?
Statement of owner equity
Balance sheet
Income statement
Statement of cash flow
A lender would usually prefer to have farm assets valued at their ____ value on a balance sheet that is part of a loan application.
Accrual
Cash
Market
Cost
The "cost" value shown on a balance sheet for an asset such as a tractor is equal to _.
The original purchase price
The original purchase price less depreciation expense taken to date
The original purchase price plus cost of all repairs to date
The cost of a new tractor of the same size
A "contingent" or "deferred" income tax liability is one that _.
Is owed but not yet paid
Would be owed if and when an asset is sold
Represents delinquent taxes from past years
Would be due under cash accounting but not accrual accounting
The "cost" value of farmland can change due to _.
Changes in the selling price of farmland
Accumulated depreciation
The cost of nondepreciable improvements made, such as terraces and earthen dams
Increases in property taxes
Paying a seed dealer a sum of money in December to be applied toward seed to be delivered in the spring would show up on a balance sheet as _.
A partial budget
A prepaid expense
An accrued expense
A normal good
Which of the following items on a balance would NOT be considered when making accrual adjustments to net income?
Accrued interest
Change in market value of land
Inventories of market livestock
Prepaid expenses
Which of the following is NOT included as an expense on the net farm income statements?
Depreciation
Interest payments made on loans
Principal payments made on loans
The cost of supplies used but not yet paid
Which type of financial statements would be most useful for keeping record of expenses?
Net worth statement
Net income statement
Statement of owner equity
Statement of cash flows
The current ratio is a measure of a farm firm’s _.
Return on equity
Ability to pay short-term credit obligations
Return on investment in current assets
Level of total debt to total assets at a present time
The degree to which a farm’s, assets adequately secure its debts is referred to as _.
Efficiency
Liquidity
Profitability
Solvency
An advantage of using the value of working capital instead of cash flow budget is to analyze the farms liquidity would be that _.
It is simpler to calculate
It takes into account revenue to be received from the sale of products not yet in existence
It takes into account the timing of the cash flows
It takes into account future operating expenses as well as debt repayment
When the value of livestock production per $100 feed fed is greater than 100 it means that _.
Feed cost were less than gross revenue adjusted for inventory changes home consumption and livestock purchases
The livestock enterprise had a negative profit
The livestock enterprise had a positive profit
$100 per hundredweight was the breakeven sale price
Which of the following does NOT analyze the solvency of the farm business?
Debt/asset ratio
Turnover ratio
Debt/equity ratio
Equity/asset ratio
What is a measure of economic efficiency?
Net farm income
Gross revenue per year of labor
Change in owner equity
Net cash flow
Which of the following farm business analysis measures is NOT a measure of efficiency?
Gross revenue generated per person
Pounds of milk produced per cow per year
Value of crops produced per acre
Dollars received per ton of hay sold
A farm’s asset turnover ratio measures_.
How often they replace machinery and equipment
How much gross revenue is generated for each dollar invested in farm assets
How many years it takes to pay for machinery and buildings
How much debt the farm has for each dollar of assets
A ranch that just replaced a large number of fences and corrals would most likely see which of the following ratios increase?
Depreciation expense ratio
Interest expense ratio
Operating expense ratio
Net farm income from operations ratio
Which of the following would
NOT appear on a cash flow budget?
Feed purchases
Inventory change
Family living expense
Cost of new tractor
Which of the following would appear on an income statement but NOT on a cash flow budget?
Gain or loss on sale of capital asset
Inventory changes
Depreciation
All of the above
When preparing a cash flow budget, it is important to _.
Take into account the expected timing of cash inflows and outflows
Include all noncash expenses
Include only noncash revenues
Estimate expected cash inflows and outflows for a whole year only
A cash flow budget can be used to _.
Estimate when and how much money will need to be borrowed during the year
Estimate when and how much debt can be repaid during the year
Estimate when excess cash may be available so plans to be made to invest it
All of the above
A projected negative annual cash flow indicates _.
Projected asset values are less than projected liability values
Projected cash inflows and less than projected cash outflows
Depreciation expense is too high
Net farm income will be negative
A cash flow budget can be used to monitor the farm business by _.
Comparing actual cash inflows and outflows to the budgeted monthly cash flow
Compare an actual cash, inflows and outflows to 10 year averages
Comparing the projected ending cash balances to the actual balances for each month
Comparing actual selling prices to those assumed in the cash flow budget
The cash flow analysis of an investment and a new capital asset should include projections for _.
Several months
One year on a monthly basis
One year for a whole year only
Several years
The last step in constructing a cash flow budget should be _.
Estimating the amount of crop and livestock production for the year
Estimating how much new current debt will be needed and can be repaid each month
Estimating family living expenses
Estimating one payment on existing debt are due
Cash flow budget should contain all of the following items except _.
Depreciation
Principal payments on machinery loans
Cost of new farm machinery to be purchased
Diesel fuel
A projected negative cash balance at the end of the year can be made positive by _.
Delaying proposed purchases of capital assets
Carrying over less inventory of stored grain to the following year
Lengthening repayment periods on term loans
All of the above
The size of the minimum cash balance a farm business should try to show at the end of each budgeting period will depend on _.
The total dollars of cash inflows and outflows projected
The form of farm business organization the farm chooses
The number of acres of farmland
The number of people employed on the farm
Which of the following is a non-current asset?
Feeder cattle
Feed bill at a local feed store
Feed inventory
A 36 month certificate of deposit
An organized list of the value of all assets and all liabilities used by an accounting system is called _.
A chart of account
A balance sheet
An income statement
A debit
Which financial statement assesses a specific point in time rather than a period of time?
Balance sheet
Statement of cash flows
Statement of owner equity
Income statement
What is NOT included as an expense on the net farm income statement?
Depreciation
Interest payments made on loans
Principal payments made on loans
The cost of supplies used but not yet paid for
What type of financial statements would be most useful for keeping records of expenses?
Net worth statement
Net income statement
Statement of owner equity
Statement of cash flows
Which of the following is a measure of economic efficiency?
Net farm income
Gross revenue per year of labor
Change in owner equity
Net cash flow
Noncurrent assets are sometimes referred to as _____.
Intermediate and long-term assets
Inventory assets
Assets that will be sold during the next accounting period
Assets such as cash, marketable securities, account and ntoes reveivable
Net worth or owner equity refers to the difference between _.
Total assets and total liabilities
Total revenue and total expenses
Total cash income and total cash expenses
Beginning net worth or owner equity and ending net worth or owner equity
On a balance sheet, using market values for each intermediate and long-term assets, the sources of owner equity (net worth) will include with of the following?
Contributed capital
Retained earnings
Valuation equity
All of the above
On the balance sheet, total assets must equal _.
Total liabilities
Total assets minus total liabilities
Total assets minus net worth
Total liabilities plus net worth
The principal due within 12 months on term liabilities represents _.
The amount of principal the business plans to pay on its operating loan during the next accounting period
The amount of principal that must be paid on intermediate and long-term liabilities during the next accounting period
The amount of new borrowing on the operating loan
The amount of interest that will be due on intermediate and long-term liabilities during the next accounting period
The primary purpose of the Statement of Cash Flows is to indicate _.
The sources and uses of cash
The sources and uses of revenue
If there will be future cash flow problems
If there is sufficient loan repayment capacity
The Statement of Owner’s Equity can be used for which of the following?
Explaining the change in owner equity for the accounting period
Explaining the change in the amount of cash for an accounting period
Explains the per unit cost of production for the accounting period
All of the above
If you are considering a change in the farm business that affects only a few items in the total farm budget, this change could most appropriately be evaluated using _.
An enterprise budget
A partial budget
A cash flow budget
A total farm budget
When an increase in the level of production of one enterprise causes a reduction in the level of production of another enterprise, these two enterprises are said to be _.
Independent
Complimentary
Competitive
Supplementary
Which of the following statements is NOT a true statement about Cash Flow Projections?
They include both known and unknown amount of income and expense
The actual results for the year may be better or worse than the projected
Although the statement is often requested by lender, it is of equal or more importance to the producer
Adequate “ cash flow” assures a positive “ project net farm income”
What is true concerning projected “Term Debt Coverage Ratio”?
All of the profit is available to service debt
Depreciation is added to Netflix account because it is a fictitious number anyway
It is the relationship of payments due in dollars available to make them
Interest on term that is bad Internet for income because it is not really important
What is loan amortization?
The ability to get a loan from the bank
Paying off debt with a varying repayment schedule
Paying off debt with a fixed repayment schedule
The ability to repay a loan from the bank
Interest is _.
The amount of money borrowed from the lender at the time of the loan
Half of principal
The cost of borrowing money
The balance
A liquidity ratio is a measure of ___ risk.
Human
Legal
Market
Financial
If five farms have the following debt to asset ratios, which ratio indicates the greatest risk?
2.5
0.7
1.6
3.0
Working capital is _.
A ratio that shows the ability to pay off current debt
A dollar amount only available to pay off term debt
The dollar amount that equals current assets minus current debt
The difference between total debt payments and current debt payments
What is the Law of Supply?
The higher the quantity demanded, the higher the price
The higher the price, the higher the quantity supplied will be
The lower the demand, the higher the price will be
All of the above
The cost of resources used in production for which no actual monetary payment is made is a(n) ___ cost.
Tacit
Implicit
Covert
Explicit
If an increase in income results in an increase in the demand for chicken, then chicken is _.
A neutral good
A luxury good
A normal good
An inferior good
