Chapter Two

Question 1

1. List two taxes farmers are liable to pay?

Answer 1

(i)Income Tax
(ii) PRSI (Pay related Social Insurance.
(iii) USC (Universal Social Charge)
(iv) Capital Gains Tax (CGT)
(v) Capital Acquisition Tax (CAT)
(vi) Value Added Tax (VAT) if registered.

Question 2

2. What is a ‘STATEMENT’ is in relation to farm accounts?

Answer 2

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Question 3

3. Why a cheque should be crossed.

Answer 3

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Question 4

4. List TWO pieces of information that should be on an invoice.

Answer 4

Customer name.
Supplier Name
Date the bill was sent.
V.A.T
Total Value of goods.
Docket Numer.

Question 5

7. Why credit cards should be avoided when paying for goods.

Answer 5

Avoid interest: Credit cards should be avoided if possible for farm costs unless it possible to clear the balance before interest needs to be paid.

Interest rates are usually quite high (over 13% per anum). Credit cards can be used if the balance owed is cleared before the interest is charged.

Question 5

6. What is the definition of a Non-Depreciable asset

Answer 5

An asset that does not fall in value due to wear and tear. Eg Land.

Question 6

8. What is the ‘Golden Rule’ of filing?

Answer 6

“File it so that you can find it”.

Question 7

9. List two of the documents needed for farm accounts.

Answer 7

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Question 8

10. Which ONE of the following list of four options is NOT a physical efficiency on a beef farm?

Answer 8

See image.

If this exact question comes up on the day you’ll just have to recognize what’s not on the table.

Question 9

11. List two pieces of information that can be found on a bank statement.

Answer 9

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Question 10

12. Complete Bank reconciliation – check from page 56 in the book

Answer 10

See book.

Question 11

13. Explain the difference in ‘’INPUT’’ stocks and ‘’OUTPUT stocks on the farm.

Answer 11

Input stocks are purchased raw materials that go into producing finished saleable products on the farm.

Output stocks are products produced on the farm that go into producing finished saleable products on the farm.

Question 12

14. Livestock of all ages are entered into the stock inventory as the same age and livestock units. – True or false

Answer 12

False. Livestock are entered into the stock inventory at different ages and livestock units.

Question 13

15. What is the definition of a depreciating asset and list and example?

Answer 13

An asset that fall in value due to wear and tear. Eg Machinery/Buildings.

Non Depreciate asset - Do not ear out/lose value.

Question 14

16. In depreciation terms, what is the ‘’diminishing balance’’ method

Answer 14

It reflects the true wear and tear on a machin or building. Eg a 60000 tractor depreciated at 10% (6000) is worth 54,000 at the end of the year.

In the second year the accountant gets 10% of the 54,000 in the second year (5,400).

Question 15

17. In depreciation terms, what is the ‘’Straight line’’ method

Answer 15

It’s rel

Question 16

18. A farmer buys a new quad for €10,000. How much is the quad worth after 3 years if it depreciates at a rate of 10% per year. Depreciate using the diminishing balance method.

Answer 16

Is it 7000 euro?

Question 17

There are a number of important reasons why farmers should keep farm accounts. Discuss in detail the reasons for keeping farm accounts?

Answer 17

1. To measure Profit or Loss.
2. For Tax
3. Grant Aid for Developmental Work and for VAT.
4. To avail of Education Maintenance Grants.
   5 For a Successful Loan Application.
5. For examining the Farm Business.
6. Physical Efficiencies.
7. To monitor and control Spending.
8. To enable your Agricultural advisor to draw up a detailed farm development Plan.
   10 To measure trends in Net Worth.

Question 18

Teagasc provides a variety of different supports for Irish farmers. Explain in detail some of ways Teagasc supports farmers?

Question 19

Discuss in detail five key physical performance indicators for your chosen enterprise (beef, dairy, sheep, tillage or other)?

Question 20

Describe five benefits of farm partnerships to an Irish family farm?

Question 21

What are the ten reasons to keep accurate accounts and records?

Answer 21

1. To measure Profit or Loss.
2. For Tax
3. Grant Aid for Developmental Work and for VAT.
4. To avail of Education Maintenance Grants.
   5 For a Successful Loan Application.
5. For examining the Farm Business.
6. Physical Efficiencies.
7. To monitor and control Spending.
8. To enable your Agricultural advisor to draw up a detailed farm development Plan.
   10 To measure trends in Net Worth.

Question 22

What is an invoice?

Answer 22

An invoice is a request for payment from the supplier to the customer.

Question 23

Difference betwen Direct Debit and Standing Order?

Answer 23

Direct Debit - Payment taken automatically from bank account to service provider. Amount varies depending on how much the service was used.

Standing Order similar to a direct debit except that the amount of money does not change.

Question 24

Disadvantage of Cash?

Answer 24

Cash payments without proof of purchase (receipts) cannot be used as a farm cost for tax purposes.

Question 25

The five types of bank accounts a farm can have?

Answer 25

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Question 26

What is physical and Financial Farm Data needed for?

Answer 26

Measuring physical enterprise performance. Measuring Farm Management accounts Tax accounts.

Question 27

What are the rules accountants follow when valuing livestock?

Answer 27

See image

Question 28

What are the key differences between Management and Taxation accounts?

Answer 28

Question 29

What is a Capital Allowance?

Answer 29