ASFMRA AAC flashcards
ASFMRA AAC · Build recall with a focused review session.
33 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Marginal analysis
- A decision rule comparing the additional cost of one more unit of input or output against the additional return it generates, ignoring sunk and average costs.
- Opportunity cost
- The value of the next-best alternative given up when a resource is committed to a chosen use, required in any comparison of enterprise options.
- Sunk cost
- A cost already incurred and unrecoverable that must be excluded from forward-looking decisions because it cannot change with the choice made.
- Time value of money
- The principle that a dollar received today is worth more than a dollar received later, so future cash flows are discounted to present value using an interest rate.
- Current ratio
- Current assets divided by current liabilities; measures the farm's ability to meet short-term obligations from short-term resources.
- Debt-to-asset ratio
- Total liabilities divided by total assets; indicates the share of farm assets financed by creditors and the degree of financial leverage.
- Economic profit
- Total revenue minus all economic costs, including unpaid operator labor, management, and a charge for equity capital employed in the business.
- Highest and best use
- The reasonably probable, legally permissible, physically possible, financially feasible use that produces the highest value for a property.
- Break-even yield
- Total cost per acre divided by expected price per unit; the yield at which revenue exactly covers costs and profit is zero.
- Scope of work
- A written statement of engagement objectives, deliverables, data sources, timeline, assumptions, and fee basis agreed before analysis begins.
- Conflict of interest
- A financial or personal interest that could bias professional judgment; must be disclosed in writing and avoided when material to the engagement.
- Engagement sequence
- The ordered consulting process: define objective, set scope and fee, request and verify data, analyze, draft, review, finalize, and follow up.
- Data hierarchy
- Ranking of evidence reliability: audited or lender-verified records highest, internally prepared statements next, producer estimates lowest, each documented by source and date.
- Partial budget
- A format comparing added returns plus reduced costs against reduced returns plus added costs to evaluate a specific proposed change in the operation.
- Enterprise budget
- An estimate of returns and costs for a single production activity on a per-unit basis, used to compare profitability among enterprises.
- Cash versus accrual
- Cash accounting records receipts and payments when cash moves; accrual records revenue when earned and expense when incurred, regardless of timing.
- Sensitivity analysis
- Testing a recommendation against a range of prices, yields, and costs to show how results change and to identify break-even values for key variables.
- Data verification
- Confirming inputs against source documents such as signed leases, loan amortization schedules, inventory counts, and verified financial statements before analysis.
- Term debt coverage ratio
- A repayment measure dividing net farm income plus nonfarm income, interest, and depreciation by scheduled principal and interest due.
- Assumption disclosure
- Explicitly labeling every projected input as an assumption rather than observed fact, with its source, so the analysis can be replicated and challenged.
- Objectivity
- The ethical duty to base conclusions on verified evidence rather than the client's preferred outcome or the consultant's own financial interest.
- Confidentiality
- The duty not to disclose client financial or operational data to third parties without written authorization, except where disclosure is legally required.
- Competence rule
- An ethical standard requiring the consultant to accept only engagements within their training and experience, disclosing limits or engaging qualified specialists.
- Fee transparency
- The practice of stating the fee basis clearly in advance and avoiding contingency arrangements that reward a predetermined conclusion.
- Attribution duty
- The obligation to cite data sources, models, and third-party analyses used in a report and never present another's work as original.
- Workpaper retention
- Keeping notes, calculations, and correspondence supporting a report for the period required by law and the engagement agreement.
- Referral fee disclosure
- Written disclosure of any commission, referral fee, or vendor compensation received in connection with an engagement, made before the client accepts the engagement.
- Committee-approved elective
- Education credit counted toward AAC electives only when the committee approves the course as consulting-related; documentation shows provider, title, date, and hours.
- Ethics hour category
- A separately tracked continuing education requirement for professional ethics that technical or production courses cannot satisfy.
- Education documentation
- Verifiable proof of course completion such as a certificate or transcript showing provider, title, date, and hours earned for credit reporting.
- Executive summary
- A standalone opening section stating the consulting question, the key findings, and the recommendation in one page or less.
- Effective date
- The date as of which the analysis, data, and conclusions apply; results are time-sensitive and must state this date explicitly.
- Limitations section
- A report section identifying data quality constraints, model limits, and events outside the analysis that could affect the conclusions.