BEC Exam Format and Content

The Business Environment and Concepts (BEC) test includes a broad range of general business topics. These are topics that students cover in a business school program of study. Your BEC exam format will include 72 multiple-choice questions and 3 written communication, or essay questions. Currently, this is the only test on the CPA exam that includes essay question. You’ll have 3 hours to complete this test. The BEC test has the highest passing rate of the four sections, so some consider it the “easiest” of the tests (although that certainly varies person to person!).

Here are some of the content areas you’ll see on the BEC exam:

Corporate governance

The accounting scandals of the early 2000s, such as Enron and WorldCom, have increased the importance of corporate governance. Governance refers to the responsibilities of a company’s senior management team. Among other things, management has to put controls in place to ensure that the financial statements are accurate.

Now, I hope that you’ll apply some common sense to this area of the BEC test. For example, it’s important for companies to have board members who are independent. That means that their only compensation from the company is their fee as a board member. Common sense should tell you that independent board members are more likely to provide objective advice.

As you come across corporate governance questions, apply some common sense.

Economic concepts

I’ve found that CPA candidates sometimes have trouble with economic analysis. That’s because economics may seem very different from accounting and finance. For example, your BEC test will cover the impact of converting from one currency into another. If a firm operates overseas and is headquartered in the US, currency risk is an issue.

The BEC exam covers other types of economic risks, such as interest rate risk. When answering questions about risk, put yourself in the shoes of the business manager. What risk is the manager facing?

Business decisions

A big portion of the BEC test deals with business decisions. Take a look at the title of your accounting textbooks. I’ll bet you that at least half of them use the word “decision” or the phrase “decision-making” in the title.

Managers make tough business decisions everyday. Those decisions are tough, because they can have a big impact on the finances of a business. If you’ve worked in business, or if you have an undergraduate degree in business administration, you may excel on this portion of the test.

This section of the exam covers “make vs. buy” decisions, for example. Should you make a component part yourself, or buy the part from a vendor? Another BEC topic is capitalization. If you need to raise money to run your business, should you borrow money or issue common stock?

Essay questions

The BEC test is the only area on the exam that uses written communication (essay) questions. The other tests use simulations, but those questions do not require the same amount of writing as an essay question.

Now, the temptation is to rush through your essay questions. If you have a base of knowledge on the topic listed in the question, you just start writing. After all, you’re facing a time limit.

Slow down! Before you start writing, do yourself a favor and create an outline. Yes, it will take some time. However, writing an outline helps you create a logical flow to your essay. The outline can help you write clearly. It makes it easier for the grader to find the topics that the essay question is covering.

The BEC exam format is slightly different from the other sections of the CPA, but it’s still a standardized test. With proper study and a good strategy for essay questions, you can perform well on the BEC test.

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