2016 State Farm Business Management Contest

A cash flow budget project to the next year can provide information on:

• Project borrowing requirements and repayment ability

• Return to the farm operator's labor and management

• Net worth of the farm business

• Rate of return on the farm investment

When local basis increases, it is an indication that

• Futures prices are decreasing

• Local demand is decreasing

• Local supply is constant

• Local price is higher than the futures price

The cost of using a resource in one way is the return that could be obtained from using it in its most profitable alternative use. This economic principle is

• Peter's principle

• The principle of marginal substitutions

• The law of diminishing returns

• The principle of opportunity cost

Which is the first level of government that could govern how your land is used?

• Township

• County

• State

• Federal

A farmer rents and adjacent 160 acres of cropland for $110 per acre to operate with the current 800 acres and existing equipment. The effect on the farm's costs will be:

• To increase fixed costs per acre

• To decrease fixed costs per acre

• To increase variable costs per acre

• To decrease variable cost per acre

Accrual Accounting:

• Records income when received and expenditures when paid

• Records income when earned and expense when incurred

• Does not require maintaining an inventory of assets

• Is not recommended by accountants

If a farmer discovered that he had 1000 more bushels of corn stored than he had estimated when he figured his net farm income for the year - this would...

• Raise his actual cash net farm income

• Lower his actual cash net farm income

• Raise his actual accrual net farm income

• Lower his actual accrual net farm income

In January a cattle feedlot operator is concerned that the on-going drought and the severe winter will create higher feeder cattle prices this fall. To reduce risk and uncertainty he could

• Sell a live cattle contract for this October

• Buy a live cattle contract for this October

• Sell a feeder cattle contract for this October

• Buy a feeder cattle contract for this October

Which of the following statements is a true statement about the cash method of accounting?

• It more accurately reports true net income from the farm

• It is more complicated than the accrual system

• It reports the receipts and the expenditures in the period in which they are received or paid

• There is no difference between accrual and cash methods.

When developing a marking plan which of the following is a consideration?

• Yield

• Family living needs

• Principle repayment

• All of the above would be considered.