2011 State Non-Math M/C

Farm Management CDE

. 8. A acre equals

A. 0.40 hectares

B. 0.74 hectares

C. 2.47 hectares

D. 5.05 hectares

E. None of the above

A

. 9. 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?

A. 2%

B. 3%

C. 5%

D. 7%

E. None of the above

D

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

A. No impact

B. Increase the present value

C. Decrease the present value

D. Cannot tell

E. None of the above

C

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

A. compounding.

B. discounting.

C. forwarding.

D. ratio analysis.

E. None of the above

B

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

A. vertical integration.

B. horizontal integration.

C. supply company.

D. marketing cooperative.

E. None of the above

A

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

A. surplus.

B. boycott.

C. monopoly.

D. shortage.

E. None of the above

D

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

A. too high.

B. too low.

C. not affected.

D. fixed.

E. None of the above

C

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

A. Basis narrows.

B. Basis widens.

C. Basis goes out of existence.

D. Basis is usually the same all year long.

E. None of the above

B

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

A. basis. B. margin. C. commission. D. spread.

E. None of the above

B

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

A. average variable cost.

B. average fixed cost.

C. average total cost.

D. marginal cost.

E. None of the above .

D

. 18. A farm business with declining average total costs has

A. increasing returns to size.

B. decreasing returns to size.

C. constant returns to size.

D. decreasing demand.

E. None of the above

A

. 19. Which of the following is not a type bankruptcy?

A. Chapter 7

B. Chapter 11

C. Chapter 12

D. Chapter 13

E. All are bankruptcy chapters

E

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

A. $10,000.

B. $600,000.

C. $600,000 less excess gift tax.

D. unlimited.

E. None of the above

D

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

A. to spread the fixed cost of their equipment over more acres.

B. to earn a return to under-utilized labor.

C. to help out their neighbors.

D. to supplement on-farm income.

E. All of the above

E

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

A. inventory approach to appraising. B. earnings approach to appraising. C. market approach to appraising. D. cost approach to appraising. E. None of the above.

C

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

A. longest planning horizon.

B. shortest planning horizon.

C. highest discount rate.

D. lowest discount rate.

E. None of the above

D

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

A. the balance sheet.

B. the cash flow budget.

C. the income statement.

D. a partial budget.

E. None of the above

C

26. Which of the following is considered Schedule F farm income?

A. Cull breeding stock

B. Crop sales

C. Sales of farm equipment

D. Sale of land

E. All of the abovE

B

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

A. A home

B. A raised cow

C. A greenhouse

D. A passenger car

E. None of the above .

D

28. An LLC (Limited Liability Company) is usually

A. taxed like a corporation.

B. taxed like a partnership.

C. not for profit and therefore not taxed.

D. illegal in Missouri.

E. None of the above .

B

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

A. charge for unpaid family labor.

B. depreciation.

C. an adjustment for changes in inventory.

D. sales of assets.

E. None of the above

C

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

A. $750 paid to a neighbor for hay.

B. $500 paid to a neighbor for custom work.

C. $1500 paid to a neighbor for a bull.

D. $650 paid to a neighbor for land rent.

E. All of the above

D

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

A. December 31.

B. January 31.

C. March 1.

D. April 15.

E. 90 days after payment.

C

. 32. The IRS form used to calculate self-employment tax is

A. Schedule D.

B. Form 4797.

C. Form 4562.

D. Schedule SE

E. None of the above

D

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

A. Farm Service Agency

B. Risk Management Agency

C. Farm Crop Insurance Agency

D. Rural Development Agency

E. None of the above

B

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

A. Revenue Protection

B. Yield Protection

C. Management Protection

D. Revenue Protection with harvest price exclusion

E. None of the above

C

35. On a crop insurance policy, APH stands for

A. Adjusted Protection History

B. Accumulated Price History

C. Approximate Policy Hierarchy

D. Actual Production History

E. None of the above .

D

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

A. Life insurance

B. Property insurance

C. Accident insurance

D. Liability insurance

E. None of the above

D

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

A. direct payments.

B. loan deficiency payments.

C. counter-cyclical payments.

D. acreage protection payments.

E. None of the above

A

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

A. Interest rates

B. Shrinkage during storage

C. Anticipated price in the future

D. What he paid for his grain bin

E. None of the above .

D

44. A farmer who prefers to produce all his crop under contract would be considered

A. risk averse.

B. risk neutral.

C. risk loving.

D. risk indifferent.

E. None of the above

A

. 45. 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

A. more variable.

B. less variable.

C. always higher.

D. always lower.

E. None of the above

B

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

A. more than the amount of the principal.

B. less than the amount of the principal.

C. equal to the amount of the principal.

D. dependent on the length of the loan.

E. None of the above

E

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

A. increase.

B. decrease.

C. not change.

D. Any of the above

E. None of the above

A