Farm and Ranch Management Exam 2
questions n answers
True or False: It is unethical for farm and ranch producers to keep two sets of books. - correct
answer ✔✔False
revenues and expenses are recorded when received or paid - correct answer ✔✔Cash
Revenues and expenses are recorded when produced - correct answer ✔✔Accrual
At any given time, what we have - correct answer ✔✔stock
Over a period of time how much is coming in and going out - correct answer ✔✔stock
ability of all assets to cover all liabilities - correct answer ✔✔solvency
ability to generate cash when needed - correct answer ✔✔liquidity
Which of the following is an example of a noncurrent liability?
Farm Machinery
Prepaid Expenses
Loan on feeder livestock
Loan on Machinery - correct answer ✔✔Loan on Machinery
, all assets are sold and liabilities are paid, how much money do you have left
total assets-total liabilities - correct answer ✔✔Owner Equity
Which of the following isn't a source of owner equity for a farm of business?
•Assets contributed to the business by owner
•Loan received to purchase land
•Profit retained in the business
•Increases in the value of owned land - correct answer ✔✔loan received to purchase land
fair market price less any transaction cost - correct answer ✔✔market value
for purchased items that do not normally lose value - correct answer ✔✔cost
accumulated cost of producing the item - correct answer ✔✔farm production cost
book value, used for items that depreciate - correct answer ✔✔cost less accumulated
depreciation
What are the advantages of using the cost method? - correct answer ✔✔It conforms to general
accounting standards
Changes in equity come only from retained net income or form putting more personal assets
into the business, not from changes in asset prices
What are the advantages of using market basis method? - correct answer ✔✔it gives a more
accurate indication of the current financial condition of the business
It gives better indication of the current value of collateral used in obtaining loans
questions n answers
True or False: It is unethical for farm and ranch producers to keep two sets of books. - correct
answer ✔✔False
revenues and expenses are recorded when received or paid - correct answer ✔✔Cash
Revenues and expenses are recorded when produced - correct answer ✔✔Accrual
At any given time, what we have - correct answer ✔✔stock
Over a period of time how much is coming in and going out - correct answer ✔✔stock
ability of all assets to cover all liabilities - correct answer ✔✔solvency
ability to generate cash when needed - correct answer ✔✔liquidity
Which of the following is an example of a noncurrent liability?
Farm Machinery
Prepaid Expenses
Loan on feeder livestock
Loan on Machinery - correct answer ✔✔Loan on Machinery
, all assets are sold and liabilities are paid, how much money do you have left
total assets-total liabilities - correct answer ✔✔Owner Equity
Which of the following isn't a source of owner equity for a farm of business?
•Assets contributed to the business by owner
•Loan received to purchase land
•Profit retained in the business
•Increases in the value of owned land - correct answer ✔✔loan received to purchase land
fair market price less any transaction cost - correct answer ✔✔market value
for purchased items that do not normally lose value - correct answer ✔✔cost
accumulated cost of producing the item - correct answer ✔✔farm production cost
book value, used for items that depreciate - correct answer ✔✔cost less accumulated
depreciation
What are the advantages of using the cost method? - correct answer ✔✔It conforms to general
accounting standards
Changes in equity come only from retained net income or form putting more personal assets
into the business, not from changes in asset prices
What are the advantages of using market basis method? - correct answer ✔✔it gives a more
accurate indication of the current financial condition of the business
It gives better indication of the current value of collateral used in obtaining loans
