FBLA Agribusiness Exam Questions and Answers Already Passed
Renting farm land on shares of production rather than cash results in: - Answers more risk for the
landlord, less risk for the tenant.
The projected cash flow is useful in estimating: - Answers credit needs
The elasticity of supply measures the response of a change in price on: - Answers production
An increase in the value of the U.S. dollar relative to the currency of other countries should result in: -
Answers less costly imports to the U.S
The main difference between cash and accrual accounting is that accrual accounting includes - Answers
adjustments for changes in inventory.
The present value of $100 that will be received at the end of 1 year, given a 5% interest (discount) rate
is: - Answers $95
The difference between a cash price at a particular location and a specified futures contract price is
called - Answers basis
In preparing a cash flow plan, one should not include which expense items: - Answers Machinery
depreciation
If demand and supply increased equally for an agricultural product, the results would be: - Answers An
increased quantity will be sold at the same price.
If wheat and corn are common substitutes as an input into livestock feed, then an increase in the market
price for corn is expected to: - Answers Increase the demand for wheat
If we want to consider the time value of money in considering alternative farm investments, we should
choose the investment with: - Answers The highest net present value.
If the government were to set the price of milk at an artificially high price, what is likely to occur. -
Answers A surplus.
There is a significant difference between which of these terms - Answers Hedging - speculating.
The nearby hog futures contract closed at $49.80 with a local basis of $1.85. The local cash market was: -
Answers $47.95
A farmer has total assets of $500,000 of which land is $300,000. The farmer's debt : equity ratio is 1.0.
What will the farmer's debt : equity ratio be if the lender devalues the land by 30%? - Answers 1.56
The funds available to purchase inputs and inventory items after the sales of current farm assets and
payment of all current farm liabilities is known as: - Answers working capital.
, The most important reason for a complete farm record keeping system should be: - Answers to provide
information for farm management decision-making.
A cost of production which does not vary with level of total production and includes items as
depreciation, taxes, insurance, interest on investments is called: - Answers a fixed cost
Liquidity is best described as: - Answers the ability to meet cash obligations as they come due.
The difference between net worth and total assets is: - Answers total liabilities.
A business is "solvent" if total: - Answers assets exceed the total liabilities.
Net worth is a measure of: - Answers financial position.
Which of the following should be listed in the account book as the purchase of a capital asset? - Answers
herd sire.
A stated advantage of sole proprietorship compared to a corporation is: - Answers fewer legal
constraints
The major advantage of renting or leasing over purchasing land or machinery is to: - Answers release
capital for other uses.
Producers can diversify or specialize in their production. When producers diversify they are trying to
manage some of their risk. When specializing they are: - Answers increasing efficiencies in the enterprise
In a free market, the role of price is to serve as a guide: - Answers in the decision of what, when, and the
quantity to produce
Forward contracting provides the farmer with: - Answers less price uncertainty
At the beginning of last year, you had an outstanding loan for $90,000. The loan carries an interest rate
of 12% annual percentage rate. You make one loan payment at the end of the year for $25,400. What is
the outstanding balance at the beginning of this year? - Answers $55,000
When a farmer increases his investment in land, buildings, and equipment without increasing the total
units of production, the cost per unit of production: - Answers increases
Purchase of a call option on corn means: - Answers The buyer may, but is not required to buy a corn
futures contract at a set price.
Corn yields 90 bushels per acre and has a production cost of $140 per acre. Current market prices are
$2.50 per bushel for corn and $6.00 per bushel for soybeans. Soybeans can be raised at a production
cost of $110 per acre. At what breakeven yield per acre would soybeans generate the same net return
per acre as corn? - Answers 32 ½ bushels
Renting farm land on shares of production rather than cash results in: - Answers more risk for the
landlord, less risk for the tenant.
The projected cash flow is useful in estimating: - Answers credit needs
The elasticity of supply measures the response of a change in price on: - Answers production
An increase in the value of the U.S. dollar relative to the currency of other countries should result in: -
Answers less costly imports to the U.S
The main difference between cash and accrual accounting is that accrual accounting includes - Answers
adjustments for changes in inventory.
The present value of $100 that will be received at the end of 1 year, given a 5% interest (discount) rate
is: - Answers $95
The difference between a cash price at a particular location and a specified futures contract price is
called - Answers basis
In preparing a cash flow plan, one should not include which expense items: - Answers Machinery
depreciation
If demand and supply increased equally for an agricultural product, the results would be: - Answers An
increased quantity will be sold at the same price.
If wheat and corn are common substitutes as an input into livestock feed, then an increase in the market
price for corn is expected to: - Answers Increase the demand for wheat
If we want to consider the time value of money in considering alternative farm investments, we should
choose the investment with: - Answers The highest net present value.
If the government were to set the price of milk at an artificially high price, what is likely to occur. -
Answers A surplus.
There is a significant difference between which of these terms - Answers Hedging - speculating.
The nearby hog futures contract closed at $49.80 with a local basis of $1.85. The local cash market was: -
Answers $47.95
A farmer has total assets of $500,000 of which land is $300,000. The farmer's debt : equity ratio is 1.0.
What will the farmer's debt : equity ratio be if the lender devalues the land by 30%? - Answers 1.56
The funds available to purchase inputs and inventory items after the sales of current farm assets and
payment of all current farm liabilities is known as: - Answers working capital.
, The most important reason for a complete farm record keeping system should be: - Answers to provide
information for farm management decision-making.
A cost of production which does not vary with level of total production and includes items as
depreciation, taxes, insurance, interest on investments is called: - Answers a fixed cost
Liquidity is best described as: - Answers the ability to meet cash obligations as they come due.
The difference between net worth and total assets is: - Answers total liabilities.
A business is "solvent" if total: - Answers assets exceed the total liabilities.
Net worth is a measure of: - Answers financial position.
Which of the following should be listed in the account book as the purchase of a capital asset? - Answers
herd sire.
A stated advantage of sole proprietorship compared to a corporation is: - Answers fewer legal
constraints
The major advantage of renting or leasing over purchasing land or machinery is to: - Answers release
capital for other uses.
Producers can diversify or specialize in their production. When producers diversify they are trying to
manage some of their risk. When specializing they are: - Answers increasing efficiencies in the enterprise
In a free market, the role of price is to serve as a guide: - Answers in the decision of what, when, and the
quantity to produce
Forward contracting provides the farmer with: - Answers less price uncertainty
At the beginning of last year, you had an outstanding loan for $90,000. The loan carries an interest rate
of 12% annual percentage rate. You make one loan payment at the end of the year for $25,400. What is
the outstanding balance at the beginning of this year? - Answers $55,000
When a farmer increases his investment in land, buildings, and equipment without increasing the total
units of production, the cost per unit of production: - Answers increases
Purchase of a call option on corn means: - Answers The buyer may, but is not required to buy a corn
futures contract at a set price.
Corn yields 90 bushels per acre and has a production cost of $140 per acre. Current market prices are
$2.50 per bushel for corn and $6.00 per bushel for soybeans. Soybeans can be raised at a production
cost of $110 per acre. At what breakeven yield per acre would soybeans generate the same net return
per acre as corn? - Answers 32 ½ bushels
