Some tout Business Environment and Concepts (BEC) as the easiest section because it has the highest pass rate of the four sections that comprise the Uniform CPA Exam. However, underestimating BEC can be a sure path to retaking this section. BEC covers a wide array of topics including Corporate Governance, Economic Concepts and Analysis, Financial Management, Information Systems and Communications, Strategic Planning, and Operations Management. Not putting enough time and effort in your preparation can result in a big zoink when it comes to this three hour section. As a reminder, you will have 72 multiple choice questions (85 percent) and 3 written communication tasks (15 percent). To maximize your chance of success, it is very, very important to do well on the multiple choice questions. After all, it is the only section that you can pass with just performing the multiple choice. So let’s take a look at a few sample CPA BEC practice questions.

Sample CPA BEC Practice Questions

Corporate Governance

Which one of the following is not one of the objectives of COSO’s Internal Control – Integrated Framework?

1. Reporting
2. Operations
3. Strategic
4. Compliance

Economic Concepts and Analysis

The nominal interest rate is 8 percent and the rate of inflation is 6 percent. What is the real interest rate?

1. 1.3 percent
2. 2 percent
3. 4 percent
4. 48 percent

Beautiful Mind Intermission

Just in case you needed some economic inspiration, check out the following clip on game theory 🙂

Financial Management

Calculate the required rate of return for a company using the Capital Asset Pricing Model (CAPM). Specifically, the company has a market return of 10 and a beta of 0.50. The risk-free rate is 3 percent.

1. 1.5 percent
2. 3.5 percent
3. 5.0 percent
4. 6.5 percent

Information Systems and Communications

Which of the following is not an information criteria under the Control Objective for Information and Related Technology (COBIT) framework?

1. Anonymity
2. Compliance
3. Effectiveness
4. Reliability

Strategic Planning

Harry Potter is interning for Olivander Wands, which sells wands. Harry gathers the following financial information: Budgeted sales were 500 at $55 per unit. Actual sales are 600 at $50 per unit. Calculate the sales price variance of Olivander Wands.

1. $ (3,000)
2. $ (2,500)
3. $ 2,500
4. $ 3,000

Operations Management

Given the following information, calculate the cost of goods sold:

1. $ 65,000
2. $ 95,000
3. $ 105,000
4. $ 110,000

Sample CPA BEC Practice Questions’ Solutions

Corporate Governance

Which one of the following is not one of the objectives of COSO’s Internal Control – Integrated Framework?

1. Reporting
2. Operations
3. Strategic
4. Compliance

Economic Concepts and Analysis

The nominal interest rate is 8 percent and the rate of inflation is 6 percent. What is the real interest rate?

1. 1.3 percent
2. 2 percent
3. 4 percent
4. 48 percent

Financial Management

Calculate the required rate of return for a company using the Capital Asset Pricing Model (CAPM). Specifically, the company has a market return of 10 and a beta of 0.50. The risk-free rate is 3 percent.

1. 1.5 percent
2. 3.5 percent
3. 5.0 percent
4. 6.5 percent

Information Systems and Communications

Which of the following is not an information criteria under the Control Objective for Information and Related Technology (COBIT) framework?

1. Anonymity
2. Compliance
3. Effectiveness
4. Reliability

Strategic Planning

Harry Potter is interning for Olivander Wands, which sells wands. Harry gathers the following financial information: Budgeted sales were 500 at $55 per unit. Actual sales are 600 at $50 per unit. Calculate the sales price variance of Olivander Wands.

1. $ (3,000)
2. $ (2,500)
3. $ 2,500
4. $ 3,000

Operations Management

Given the following information, calculate the cost of goods sold:

1. $ 65,000
2. $ 95,000
3. $ 105,000
4. $ 110,000