FABM 2 QUIZ

Why is record keeping important for business management?

• It helps in making good business decisions.

• It increases the number of employees.

• It reduces the need for marketing.

• It eliminates competition.

What is the purpose of a chart of accounts in farm business management?

• To analyze the health and profitability of the farm business.

• To list all liabilities of the business.

• To track daily sales and expenses.

• To manage employee payroll.

What is the third step in setting up a record system?

• Select a method of reporting farm income and expenses.

• Select a record-keeping system suited to their particular needs.

• Select an accounting system suited to their business situation.

• Hire a tax consultant.

What additional analysis is included in the second level of farm and ranch record keeping?

• Business analysis

• Personal budgeting

• Employee performance

• Household management

What does the cash method not use to keep track of unsold products?

• Inventory

• Sales records

• Cash flow statements

• Profit margins

What is the main purpose of summarizing revenue and expenses?

• To increase expenses

• To decrease revenue

• To understand financial performance

• To complicate accounting

Why is it important to enter a detailed breakdown of all outstanding loans?

• To increase the loan amount

• To hide financial liabilities

• To understand principal, interest, and remaining balance

• To avoid paying interest

What is the income statement divided into?

• Assets and liabilities

• Revenue and expenses

• Cash revenue and accrual adjustments

• Operating and non-operating income

What does the income statement show over a period of time?

• Assets and liabilities

• Revenue and expenses

• Cash flow

• Net worth

What does the change in total investment represent?

• Loss in investment

• Greater investment in year two

• Decrease in crop yield

• Increase in market price