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Farm Management 2009 District Test
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Farm Management Multiple Choice 2009
Terms in this set (40)
You must use the mid-quarter convention of depreciation if more than
what percent of 3-, 5-, 7-, 10-, 15-, and 20-year property is
acquired in the fourth quarter?
40%
The maximum annual contribution to an IRA is $5,000 per person for
someone under age 50 and ___________ for someone age 50 or older.
$6,000
By contributing the maximum amount to a Roth IRA, a 40-year-old
farmer will reduce his taxable income by
$0
A farmer sold his 5000-bushel corn crop at several different times during
the year. He sold 1000 bushels at $3.00, 2000 bushels at $3.50, and 2000
bushels at $4.00. What was his average price per bushel?
$3.60
You buy seed beans having 2585 seeds per pound. The directions state
to drill at the rate of 3 beans per foot with a 7-inch spaced drill.
How many 50-pound bags will you need for a 30-acre field?
52 bags
The self-employment tax rate for Medicare is
2.90%
Herbicide is usually applied to weeds and grasses around the
farmstead as a 2% solution. How many ounces of herbicide should be
added to a 2 1/2 gallon sprayer to make a 2% solution?
6.4 ounces
A farmer began the year with an outstanding balance of $50,000 on
his operating loan and accrued interest of $3,000 on the loan.
The loan carries an interest rate of 8% on outstanding principal.
Six months later he makes a $3,000 payment on the loan. After
this payment he will have an accrued interest of
$2,000.
A feedlot operator purchases a pen of 117 feeder steers with an
average weight of 780 pounds and sells them at an average weight
of 1081 pounds. Total feed cost for the pen is $25,356. Feed
cost per pound of gain is equal to
$0.720
A producer sells 12 feeder steers for $94/cwt. The average weight
per steer is 752 pounds. There is a 2% sales commission and
yardage fees of $2.10 per head. The net amount received for the
pen of steers would be
$8,287.71
If the interest rate is 8%, what is the present value of a dollar
to be received one year from now?
$0.926
On March 1, 2006, Anna borrowed $3,000 to buy bedding plants. On
October 1, 2006, she repaid the $3,000 along with $131.25
interest. What annual interest rate did she pay?
7.5%
In 2006, Paul Pigraiser had a net farm income of $40,000. Paul
had total business assets of $500,000 and total liabilities of
$250,000. Paul paid $20,000 in interest. Return on equity for
2006 would be
16%
You must use the mid-quarter convention of depreciation if more
than _____ percent of 3, 5, 7, 10, 15, and 20 year property is
acquired in the fourth quarter.
40%
All depreciable property purchased the same year that is within
the same property class must be depreciated using the same method.
This applies to all classes of depreciable property EXCEPT
27 1/2 and 39 year property.
For tax year 2006, the social security wage base was
$94,200
If the price of a commodity increases by 10% and the quantity
purchased decreases by 5%, then the demand for this commodity is
inelastic.
The type of life insurance which provides protection for a limited
time and is usually cheaper per dollar of protection is called
term.
The maximum Section 179 depreciation which can be claimed for tax
year 2006 is
$108,000
A trader with a long position in the futures market
profits when prices go up; loses when prices go down.
The main difference between a joint tenancy and tenancy in common
is
the surviving joint tenant will eventually own all of
the land as a result of right of survivorship.
Increasing leverage during a period when a farm's percent return
to total capital is less than the interest rate will mean
lower returns to equity.
A marketing function which tends to regulate the supply of a
product and provide a stable market price is
storing.
Which one of the following would cause an increase in the price of
an agricultural commodity?
A decrease in supply with no change in demand
A firm should shut down in the short run if it cannot cover its
variable costs.
Changes in price within a year which tend to follow the same
pattern over time are called
price seasonality.
If the price of a commodity is too high, the supply will be
greater than the demand resulting in a
surplus.
A farmer who buys feeder pigs could use the options market to
reduce his price risk by
buying a hog Put option.
Corn has an expected yield of 150 bushels per acre and a
production cost of $280.00 per acre. Expected market prices are
$3.50 per bushel for corn and $7.00 per bushel for soybeans.
Soybeans can be raised at a production cost of $150 per acre. At
what breakeven yield per acre would soybeans generate the same net
return per acre as corn?
56.4 bushels
If high oil corn has the same production cost per acre as regular
corn but can be sold for 25 cents per bushel more, what yield of
high oil corn is needed to equal 125 bushels of regular corn at
$4.00 per bushel?
117.6 bushels
A township is six miles square and includes
36 sections.
If a farmer purchased land for $160,000, has a loan of $100,000
remaining on the land, and the market value of the land is
$200,000, the book value of the land on the balance sheet will be
$160,000 less any accumulated depreciation.
The present value formula for estimating land prices (PV = annual
net returns divided by discount rate) assumes
All of the above
A farmer is purchasing a new baler at a cost of $26,000. His
dealer will finance the baler under the following terms: 10% down
payment with the balance repaid in equal payments over the next 6
years at 7% APR. The farmer expects the baler to last for 8 years
and have a salvage value of $6,000. How much interest will the
farmer pay the first year of the loan?
$1,638
A constant payment loan with payments consisting of principal and
interest is called
an amortized loan.
The "rule of 72" says to divide 72 by the annual interest rate to
estimate the number of years needed for an initial investment
earning that rate to double. How long would it take for $5
earning 6% a year to grow to $10?
12 years
A charge for capital used in a farmer's cattle herd is usually
included in an enterprise budget regardless of whether he borrowed
money to buy the cows or not. This illustrates the principle of
opportunity cost.
Net worth is a measure of
financial position.
The main reason for hedging is
to reduce the price risk associated with producing or
storing a cash commodity.
Cooperatives pay patronage refunds according to
amount of business done by patron.
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