Which of the following is an example of a strategic decision?

Because weather and prices are unpredictable, it is impossible to plan more than one year in advance.

The decision-maker must bear responsibility for any decisions made.

A prepaid expense is one where payment is made

An accounting period must be from January 1 to December 31.

Cash accounting will always show a lower profit than accrual accounting.

If the debt/asset ratio is increasing, then the debt/equity ratio will be

A "contingent" or "deferred" income tax liability is one that

Inventories of grain and feeder livestock would be valued at market on either a cost or market basis balance sheet.

A current ratio greater than two indicates a business has good liquidity.

The three major components of a balance sheet are assets, liabilities, and owner's equity.

Noncurrent assets have a useful life of more than one year.

All depreciation methods will result in the same total depreciation over the full life of the asset.

An advantage of using the value of working capital instead of a cash flow budget to analyze a farm's liquidity:

In general terms, "efficiency" determines whether farms and ranches with the most resources also generate the most production.

The Equal Marginal Principal should be used whenever:

Doubling both input and output price will not change the profit maximizing input and output level.

An isoquant curve shows:

Isoquants representing larger amounts of output will be further from the graph's origin.

At the output level where MC is just equal to ATC:

MC is equal to the change in TVC divided by the change in output.

On an enterprise budget, fixed costs are often called

It is safe to assume that the input levels shown on published enterprise budgets are the profit-maximizing amounts.

In whole farm planning it is assumed that when _________ is maximized, total profit is maximized

"Technical coefficients" for whole-farm planning refer to:

The shadow price or dual value for a resource in a linear programming solution shows how much total costs would increase if one more unit of the resource were available.

Which of the following are the profit increasing changes on a partial budget?

The better alternative as shown on a partial budget is sure to be the one which maximizes profit for the business.

A partial budget can be used to evaluate one specific change in an operation.

The last step in constructing a cash flow budget should be

The beginning cash balance for one time period should be the same as the ending cash balance for the previous time period.

Estate planning is most concerned with passing on the _____ of the farm to the next generation.

Oral partnership agreements are not legal in most states.

Which type of farm lease agreement results in the most price and yield risk for the tenant?

Which type of forward pricing tool cannot be reversed or offset later?

Both a decision tree and a payoff matrix can be used to illustrate the results of different combinations of management strategies and uncertain outcomes.

If a farm business incurs a net operation loss (NOL) in a certain tax year, the NOL:

A purchase of land is eligible for Section 179 expensing.

When computing the after-tax net present value of an investment

Some cash inflows may be taxed at different rates than others.

The degree to which a farm's liabilities are backed up by assets is known as:

Farming and ranching typically use less capital per worker than the average United States industry.

When using comparative sales to estimate the value of a tract of farmland, it is important to remember that the sale price of the comparative tract may have been higher than normal because:

The "market data" approach to valuing farmland relies on information about comparable sales of similar farms that have sold recently.

The biggest problem in securing sufficient labor throughout the year on a cash grain farm is:

The total number of workers employed in agriculture in the United States has increased since 1950.

The only risk employers face in hiring labor is that the employees will not have sufficient skills for the tasks at hand.

The most common method of acquiring the use of farm machinery in the United States is:

Custom hiring certain machinery operations helps reduce labor needs for a farming operation.

Standardization of farm financial ratios and accounting practices will help farm managers:

A short summary of why a particular business is in operation is called:

The term describing how much time is available to make a decision is

"Define the problem" is the first step in the decision-making process.

All managers have the same goal(s).

When something is purchased and paid for in a year before it will be used to produce income it is called a(n)

A single-entry accounting system does not maintain current values for assets and liabilities.

Of the following, which is the most liquid asset?

A statement of owner equity shows

On a cost basis balance sheet, machinery would be valued at cost less accumulated depreciation.

Noncurrent assets have a useful life of more than one year.

The depreciation method with the smallest annual depreciation in the first year of life is

Inventories of grain and feeder livestock would be valued at market on either a cost or market basis balance sheet.

Marketable securities (stocks, bonds, etc.) and the cash value of life insurance are also easy to convert to cash and are considered liquid assets.

The current ratio is a measure of a farm firm's:

Most of the information needed for analyzing profitability comes from the balance sheet.

A production function is in the amount of physical product obtained with different:

A production process requires at least one fixed input for the law of diminishing returns to be in effect.

If two inputs have a constant substitution ratio, the least-cost combination will:

Price changes cause changes in the input substitution ratio.

The marginal cost curve:

Variable costs such as seed and fertilizer that have already been paid for and applied are called "sunk costs."

The values in a crop enterprise budget are normally for

The equation for break-even yield is total cost divided by selling price.

Some enterprises may have more than one source of revenue.

A whole-farm budget contains:

Principal payments on noncurrent debts are needed for analyzing profitability, but not liquidity.

The values shown on a partial budget are

A partial budget is an appropriate tool for analyzing

Most partial budgets will need to include some opportunity costs.

When preparing a cash flow budget it is important to

A cash flow budget can be used to analyze the feasibility of a new capital investment.

Interest payments are included on a cash flow budget but principal payments are not.

Only one person can provide the management in a sole proprietorship.

Most farmers are more likely to accept a risk if

When "placing a hedge" for a commodity held in storage for later sale, a farmer does so by:

Using the coefficient of variation to measure the riskiness of a possible strategy puts more emphasis on possible results that are worse than average rather than better than average.

The goal of income tax management should be:

With the cash method, the cost of purchased feeder livestock is a tax deductible expense only in the year the animals are sold.

A financial feasibility analysis looks at the

Indicate whether the statement is true or false: Income taxes can affect the profitability of an investment.

An example of debt restructuring that would improve a farmer's cash flow in the short run is

When a borrower wants to establish credit with a new lender, the probability of success will be improved if

Indicate whether the statement is true or false: Sometimes a farm business may have to sell productive assets to meet short-term financial commitments even though profits may be reduced in the long run.

One advantage that owning farmland has over leasing is

Indicate whether the statement is true or false: The fact that the supply of farmland in the United States is essentially fixed makes land prices and rental rates less responsive to changes in crop prices and production technology than prices of variable inputs such as pesticides.

One measure of labor efficiency on a farm is

Indicate whether the statement is true or false: The Immigration Reform and Control Act requires employers to certify that workers are eligible for employment in the United States.

The main advantage of purchasing used machinery instead of new machinery is

Indicate whether the statement is true or false: Short-term rental of farm machinery is likely to have a lower cost than ownership for machines that have a low level of annual use.