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?
- Reporting
- Operations
- Strategic
- 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?
- 1.3 percent
- 2 percent
- 4 percent
- 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.
- 1.5 percent
- 3.5 percent
- 5.0 percent
- 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?
- Anonymity
- Compliance
- Effectiveness
- 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.
- $ (3,000)
- $ (2,500)
- $ 2,500
- $ 3,000
Operations Management
Given the following information, calculate the cost of goods sold:
| Beginning inventory | $ 20,000 |
| Direct Materials | $ 15,000 |
| Total production costs | $ 80,000 |
| Ending Inventory | $ 5,000 |
- $ 65,000
- $ 95,000
- $ 105,000
- $ 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?
- Reporting
- Operations
- Strategic
- 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?
- 1.3 percent
- 2 percent
- 4 percent
- 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.
- 1.5 percent
- 3.5 percent
- 5.0 percent
- 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?
- Anonymity
- Compliance
- Effectiveness
- 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.
- $ (3,000)
- $ (2,500)
- $ 2,500
- $ 3,000
Operations Management
Given the following information, calculate the cost of goods sold:
| Beginning inventory | $ 20,000 |
| Direct Materials | $ 15,000 |
| Total production costs | $ 80,000 |
| Ending Inventory | $ 5,000 |
- $ 65,000
- $ 95,000
- $ 105,000
- $ 110,000
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