agriculture business

Accrued interest on a balance sheet refers to

• interest that is past due.

• interest that has accumulated since the last loan payment.

• interest on short-term debt.

• interest forgiven by the lender.

If both demand and supply increased equally for an agricultural product, what will be the result on the quantity of the product sold and the price received?

• The same quantity will be sold at the same price.

• An increased quantity will be sold at a lower price.

• An increased quantity will be sold at a higher price.

• An increased quantity will be sold at the same price.

When a farmer borrows money to purchase land, he usually must offer the title to the property as security until the debt has been repaid. This credit instrument is commonly referred to as a

• sales contract.

• promissory note.

• mortgage.

• check.

The cost of producing one additional unit of output is called

• opportunity cost.

• substitution cost.

• average cost.

• marginal cost.

The cost of using a resource based on what it could have earned in the next best alternative is:

• An opportunity cost

• Always a variable cost

• Always a fixed cost.

• Never a consideration in enterprise analysis

If the total revenue of a farmer will cover his variable costs and some but not all of his fixed costs, he will:

• Minimize his losses by producing in the short run

• Not produce anything if he is smart

• Show a return to all factors of production.

• Minimize his profits by continuing to produce.

In analyzing the ongoing farm business, depreciation should be considered as:

• A variable cost.

• A fixed cost.

• An opportunity cost.

• An operating cost.

Which of the following statements describe the advantage of a family-farm corporation?

• Corporations do not pay income tax.

• A family corporation avoids personal liability and the liability is limited to the investment in

  the farm business.

• There is little or no market for a shareholder if he decides to sell his interest in the farm business.

• It is less expensive to establish a corporation structure.

It is profitable for a farmer to borrow money to expand his farm business when the borrowed money:

• Returns more than the cost of borrowing money

• Can be secured at a low interest rate.

• Can improve the level of production.

• Will increase volume of business.

A decline in value of an asset over its useful life associated with use, age and obsolescence is known as:

• Appreciation

• Depreciation

• Inventory

• Hedging