Agriculture Capital Requirements Quiz Chapter 1.3

What is the primary task of financial management in a farming enterprise?

Selling agricultural products
Acquisition of funds (capital) (correct)
Managing human resources
Advertising the farm's products

Why is agricultural financing considered highly risky?

Due to unpredictable consumer behavior
Variable climatic conditions leading to unstable production (correct)
Overproduction of agricultural products
Low demand for agricultural products

What factor makes it difficult for farmers to adapt to changes in demand?

High-quality standards in the farming industry
Availability of skilled labor
Inability to quickly expand production due to biological factors (correct)
Low competition in the agricultural sector

Why is land considered the most important capital asset in agriculture?

Land serves as a means of investment and production (C) Signup and view all the answers

In agriculture, why are movable assets considered challenging for financing institutions?

Mobile and difficult to identify, often handled by unskilled employees (A) Signup and view all the answers

Why do numerous small production units pose a challenge for credit providers in agriculture?

Large number of small enterprises necessitate special arrangements from credit providers (D) Signup and view all the answers

What is the key importance of farmer's integrity and management skills in agricultural financing?

They are important factors when movable assets serve as security for financing (C) Signup and view all the answers

Why do structural shortcomings in agriculture present economic challenges?

'Uneconomic units' are much higher in certain regions (D) Signup and view all the answers

'Seasonal nature of products' in agriculture implies what kind of transactions?

'Sporadic and seasonal' transactions (B) Signup and view all the answers

'Movable assets and products nondurable and dispersed' refers to their characteristics being:

'Mobile and difficult to identify' (D) Signup and view all the answers

What is the primary reason for needing fixed capital in farming?

To guard against exhausting of land (B) Signup and view all the answers

Which of the following is a characteristic of movable capital in agriculture?

Converted quickly to money (A) Signup and view all the answers

Why is the need for operating capital in farming considered extremely risky?

Lack of available credit facilities (C) Signup and view all the answers

What defines the temporary requirements of capital in farming enterprises?

Caused by varying conditions (C) Signup and view all the answers

How does the size of the farming enterprise influence the extent of capital requirements?

Optimal asset usage is less important for large enterprises (B) Signup and view all the answers

Which factor significantly affects the capital requirements in different production branches within the same region?

Differences in soil types (A) Signup and view all the answers

In farming, what is considered as 'own capital'?

Profits from farm operations after expenses (C) Signup and view all the answers

What is the primary reason for needing operational (working) capital in agriculture?

To manage current assets like production stocks and debtors (B) Signup and view all the answers

'Permanent requirements' of capital in farming are primarily aimed at ensuring:

Production capacity through investment in fixed and movable assets (A) Signup and view all the answers

What distinguishes 'loan capital' from 'own capital' in farming enterprises?

Loan capital is provided by external sources and incurs debt. (A) Signup and view all the answers