Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Exam 2 > Exam 2 F&R Kosse > Flashcards

Exam 2 F&R Kosse Flashcards

1
Q

What are the 6 purposes/uses to farm records?

A
  1. Measure profit (income statement) and assess financial condition (balance sheet)
  2. Provide data for business analysis
  3. assist in obtaining loans
  4. measure the profitability of individual enterprises
  5. assist in the analysis of new investments
  6. prepare income tax returns
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What does income estimate?

A

profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does the balance sheet show?

A

the financial condition of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Lender’s need and require financial information about the farm to help make a decision about possible loans. T/F

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

When was the Farm Financial Standards Council created?

A

It was created after the “Farm Debt Crisis” from 1983-1987

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What farm business activities are included in the accounting system?

A

production, investment, and financial activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

The production activities: operating are what?

A

related to the production of livestock and crops

-revenues and expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Investment activities are related to what?

A

the purchase, depreciation, and sale of long-lived assets. Ex. Land, Orchards, Breeding stock, Buildings, Vineyards, and Machinery

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is accounts payable?

A

an expense incurred but not yet paid (you have gotten a bill)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is Accounts receivable?

A

revenue for a product that has been sold or . service provided but for which the payment has not yet been received (you are still waiting for the check)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the accounting principle?

A

Assets = Liabilities - Owner Equity OR Owner Equity = Assets - Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is an accrued expense?

A

An expense that accrues or accumulates daily but has not yet been paid. Due date is generally in the future. (Have not received a bill)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is an asset?

A

any item of value, tangible, or financial

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is tangible?

A

something that can be touched: land, livestock, machinery, grain

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is financial?

A

a nonphysical asset: bank deposits, bonds, stocks, futures contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is an expense?

A

a cost of expenditure incurred during production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is Net Farm Income?

A

Revenue - expenses (TR-TC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is Liability?

A

a debt or other financial value of products produced for sale but not yet sold. Ex. loans, accrued expenses, accounts payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is Inventory?

A

The physical quantity and financial value of products produced for sale but not yet sold. Ex. stored grain, livestock ready for sale or could be sold at time of inventory.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is Owners Equity?

A

the difference between business assets and business liabilities; the net value of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is prepaid expense?

A

a payment made for a product or service in an accounting period before the one in which it will be used to produce revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is revenue

A

the value of products and services produced by a business during an accounting period. The revenue may be either cash or non-cash.
Non-cash revenue ex. donations, inheritance, and investment gains

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is credit?

A

a decrease in the value of an asset or expense account or an increase in a liability or owner equity account. The right hand side of a ledger

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is debit?

A

an increase in an asset or expense account or a decrease in a liability or owner equity. The left hand side of the ledger.
Debit is not bad and credit is not good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is a fiscal-year and calendar year?

A

Fiscal year uses a 12-month period that may begin on any date
Calendar year is all transactions between Jan. 1st and Dec. 31st are organized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is a single entry?

A

is like a bank account: money coming in on one side and money going out the other. *this is generally used for most farm records.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is a double entry?

A

as with debit/credit. They must be equal and offsetting, the accounts must balance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is cash basis?

A

Revenue that is recognized when received. *NOT GAAP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is accrual basis?

A

revenue that is recognized when earned and realizable *GAAP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

The only revenues and expenses recorded are actual cash receipts and cash expenses T/F

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Accrual accounting considers inventories as what?

A

revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Accrual accounting emphasizes what?

A

that a value of a product or service should be counted as revenue in the year it was produced no matter when the cash is received

33
Q

What is “Matching”?

A

once revenue for a year is determined, all expenses incurred to produce that revenue should be recorded in the same year.

34
Q

what accrual expenses are not necessarily counted in cash accounting?

A
  • prepaid expenses
  • accounts payable
  • accrued expenses
35
Q

What is solvency?

A
  • the health of the farm
  • the ability of all assets to cover all liabilities
  • Insolvent: Liabilities>Assets
36
Q

What is liquidity?

A
  • ability of farm to meet current financial obligations with current revenues
  • Ability to generate cash when needed
37
Q

What are current (liquid) assets?

A
  • easy to sell, ready for market (feeder livestock, grain)
  • used or sold within 1 year
  • with cash checking and savings
  • hedging gains/losses
38
Q

What are illiquid assets?

A

hard to sell quickly at full value (land, breeding livestock, machinery)
AKA - non-current assets

39
Q

What are current liabilities?

A

Any financial obligations due within 1 year

  • accounts at farm stores and suppliers
  • intereset on long term goals
  • accrued expenses: property and income taxes
40
Q

What are Non-current (fixed) liabilities?

A

Everything else not due in the next year

Any remaining balance on long-term debts AFTER deducting the current years payments

41
Q

What are the different time periods between

  • current assets
  • intermediate assets
  • Fixed/long-term assets
A

current assets - same or receive within 1 year
intermediate assets - 1-10 years ex: machinery, equipment, perennial crops, breeding livestock
fixed/long-term assets - more than 10 years
ex. land and buildings

42
Q

What are the different time periods between

  • current liabilities
  • intermediate liabilities
  • Long-term liabilities
A

current liabilities - same or due within 1 year
intermediate liabilities - 1-10 years
long-term liabilities - a mortgage or more than 10 years

43
Q

What is market value?

A

Is the fair market price for the place or item.

44
Q

What is Cost value?

A

the price originally paid

45
Q

What is Cost minus depreciation?

A

equals the book value

46
Q

Basic accounting says use cost value but not always true or right in agriculture. T/F

A

True

47
Q

Current assets are basically the same whether cost or market basis. T/F

A

True

48
Q

Non-current assets are generally different for buildings, machinery, and farmland but stay the same in everything else. T/F

A

True

49
Q

Liabilities, current or non-current, are all the same. There is NOT a separate cost/market basis for them. T/F

A

True

50
Q

Cost-basis balance sheets conform to what?

A

general accounting stnadards

51
Q

the market balance sheet gives a more accurate indication of the financial conditions currently of the farm. T/F

A

True

52
Q

Cost basis balance sheets can easily misrepresent what?

A

a farms financial conditions

53
Q

FFSC states that both types of balance sheets are needed for proper business analysis. T/F

A

True

54
Q

What are inventories?

A

grain storage, livestock being marketed this year: these all use market basis

55
Q

What are ratios on a balance sheet analysis?

A

relative comparison across size and time

56
Q

Liquidity measures what?

A

current ratio and working capital

57
Q

Solvency measures what?

A

debt/asset ratio
equity/asset ratio
debt/equity ratio
net capital ratio

58
Q

What is another measure?

A

debt structure ratio

59
Q

Current ratio is a solvency or liquidity?

A

A Liquidity

60
Q

What is the formula for current ratio?

A

Current ratio = current asset value DIVIDED by current liability value

61
Q

Working capital is a solvency or a liquidity?

A

A liquidity

62
Q

What is formula for working capital?

A

current assets - current liabilities

63
Q

What is formula for working capital?

A

current assets MINUS current liabilities

64
Q

Debt/Asset Ratio a solvency or liquidity?

A

A solvency

65
Q

What is the formula for Debt/asset ratio?

A

Debt/asset ratio = total liabilities DIVIDED by total assets

66
Q

Debts mean/stand for what

A

liabilites

67
Q

Equity/Asset Ratio is a solvency or a liquidity?

A

Solvency

68
Q

Debt/Equity ratio is a solvency or a liquidity?

A

solvency

69
Q

What is the formula for debt/equity?

A

Debt/equity ratio = total liabilities DIVIDED by owner equity

70
Q

Net Capital ratio is a solvency or a liquidity?

A

solvency

71
Q

what is the formula for net capital ratio?

A

Net capital ratio = total assets DIVIDED by total liabilities

72
Q

Debt Stricture Ratio formula is

A

debt structure ratio = Current liabilities DIVIDED by total liabilities

73
Q

Are smaller numbers preferred in the debt structure ratio?

A

Yes unless total debt is small then it does not matter

74
Q

The statement of owner equity changes over time. T/F

A

True

75
Q

What is an income statement?

A

A record of revenues and expenses over a period of time

76
Q

What are a couple other names for income statements?

A

operating statement and profit and loss statement

77
Q

What is a use for the income statement?

A

see if you made a business profit or had a loss but really want to know the profitability

78
Q

What are five measures commonly used in/for an income statement?

A
  • Net Farm Income from operations
  • Net Farm Income
  • Rate if Return on Assets
  • rate of return on equity
  • operating profit ratio

Exam 2 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions