Farm & Ranch Management Test 2
questions n correct answers
Net farm income represents a return to all of the following resources except - correct answer
✔✔debt capital
How do you calculate the average farm asset value? - correct answer ✔✔average=(beginning of
the year asset value + end of the year asset value)/2
An increase in accrued interest will increase total farm expenses for the year. - correct answer
✔✔True
The windrow is sold for $200 over the book value. This is a - correct answer ✔✔gain ont he sale
The information on an income statement is a - correct answer ✔✔flow variable
Depreciation for 2020 using MACRS with 20% rate and initial cost of $40,000 is - correct answer
✔✔$8,000
Bought and placed in service in 2021 equipment totaling $1,158,000. How much is Section 179
deduction can be taken? - correct answer ✔✔$1,050,000
When calculating depreciation for your own records, which depreciation method would be best
to use for a building? - correct answer ✔✔straight line
, Will the decrease in value because of depreciation show up in cost or market on the balance
sheet? - correct answer ✔✔Cost
It will always be the case that debt/asset + debt/equity=1? - correct answer ✔✔True
A negative equity to asset ratio would be an indication that - correct answer ✔✔we have more
liabilities than assets
If we borrow $100,000 to buy a piece of equipment worth $100,000, what impact will this have
on our debt/asset ratio value? - correct answer ✔✔There is not enough information to answer
If we borrow $100,000 to buy a piece of equipment worth $100,000, what impact will this have
on our equity value? - correct answer ✔✔It won't change it
On a cost basis balance sheet, owner's equity will increase if land values increase. - correct
answer ✔✔False
Which of the following is not a source of owner equity for a farm business - correct answer
✔✔Loans received to purchase land
Which of the following is an example of a non-current liability? - correct answer ✔✔loan on
machinery
If the percent return on assets (ROA) is less than the percent return on equity (ROE), borrowed
money is earning a profit on average. - correct answer ✔✔True
A ranch that just replaced a large number of fences and corrals would most likely see which of
the following ratios increase? - correct answer ✔✔depreciation expense ratio
questions n correct answers
Net farm income represents a return to all of the following resources except - correct answer
✔✔debt capital
How do you calculate the average farm asset value? - correct answer ✔✔average=(beginning of
the year asset value + end of the year asset value)/2
An increase in accrued interest will increase total farm expenses for the year. - correct answer
✔✔True
The windrow is sold for $200 over the book value. This is a - correct answer ✔✔gain ont he sale
The information on an income statement is a - correct answer ✔✔flow variable
Depreciation for 2020 using MACRS with 20% rate and initial cost of $40,000 is - correct answer
✔✔$8,000
Bought and placed in service in 2021 equipment totaling $1,158,000. How much is Section 179
deduction can be taken? - correct answer ✔✔$1,050,000
When calculating depreciation for your own records, which depreciation method would be best
to use for a building? - correct answer ✔✔straight line
, Will the decrease in value because of depreciation show up in cost or market on the balance
sheet? - correct answer ✔✔Cost
It will always be the case that debt/asset + debt/equity=1? - correct answer ✔✔True
A negative equity to asset ratio would be an indication that - correct answer ✔✔we have more
liabilities than assets
If we borrow $100,000 to buy a piece of equipment worth $100,000, what impact will this have
on our debt/asset ratio value? - correct answer ✔✔There is not enough information to answer
If we borrow $100,000 to buy a piece of equipment worth $100,000, what impact will this have
on our equity value? - correct answer ✔✔It won't change it
On a cost basis balance sheet, owner's equity will increase if land values increase. - correct
answer ✔✔False
Which of the following is not a source of owner equity for a farm business - correct answer
✔✔Loans received to purchase land
Which of the following is an example of a non-current liability? - correct answer ✔✔loan on
machinery
If the percent return on assets (ROA) is less than the percent return on equity (ROE), borrowed
money is earning a profit on average. - correct answer ✔✔True
A ranch that just replaced a large number of fences and corrals would most likely see which of
the following ratios increase? - correct answer ✔✔depreciation expense ratio
