The Business Environments and Concepts (BEC) section of the CPA exam will test your knowledge on just about everything you could have learned in your to earn you Bachelors of Science in Accountancy. You will learn about financial management, managerial accounting, forecasting and budgeting, economics, and information technology. The common theme between these topics is that they all test your ability to understand how to maximize shareholder value while minimizing risk. As a business owner and/or operator, how can you maximize the profitability while minimizing the risk that the business suffers from a monetary or nonmonetary (e.g., reputation perspective).
Many CPA candidates and CPA’s view BEC as the easiest exam and the historical pass rate supports this thesis. However, many CPA candidates make the mistake of not studying hard or taking a lazy approach when preparing for BEC because they are still burned out from AUD or FAR. If you don’t take BEC seriously, it will smack you in the face and you will be left with a failing score. In order to pass BEC, you must put yourself in the role of a business owner and/or operator and understand how to run a business to maximize shareholder value while minimizing risk.
This page provides you a comprehensive guide of the BEC CPA exam section, including trends in historical pass rates, CPA exam format, AICPA blueprint topics, question types, key areas to focus on, common BEC simulation topics, BEC written communication approach, general BEC tips, and frequently asked questions about BEC.
You’ll have full access to the Universal CPA platform! Click the button below to sign up for a free trial. No credit card required.
Over the last 5 years, the pass rate for BEC has an average of 61%, with both 2021 and 2022 CPA Exam pass rates trending right around the average.
While BEC has an average pass rate of 61%, don’t be lulled into thinking BEC will be easy! BEC is full of questions that require you to perform calculations and interpret the results of the calculation. You have to be able to use the information provided to make business decisions! The video explanations in the Universal CPA course will help you understand how to truly understand these complex questions!
It is very important to understand the structure of the BEC exam so that you have a clear understanding of what to expect on exam day. We will go through all of the relevant information that you should understand so that your mind will be at ease and you can focus on efficiently and effectively solving the multiple choice questions and task-based simulations you see on exam day at the Prometric Center.
You will have a total of 4 hours to complete all five testlets. You will have an option 15 minute break after you complete your 3rd testlet and the break will not count towards your 4 hours. The computer will ask you whether you would like to take the break or continue with your exam. We recommend utilizing the break to collect your thoughts and stamina as you will be approximately 2.5 hours into your exam by the time you finish the 3rd testlest. Once the 4 hour clock expires, your exam will automatically be closed and submitted, and any questions in-progress will be submitted as is. You will get partial credit for the simulation you are working on when time expires. We have another article that outlines how the CPA Exam is graded. To learn more, feel free to check it out!
The BEC CPA exam consists of 62 multiple choice questions, 4 task-based simulations, and 3 written communication tasks. Your score will be calculated based on a weighted combination, with multiple choice questions making up 50% of your score, task-based simulations making 35%, and the remaining 15% allocated to written communication tasks.
Multiple choice questions – Will consist of one or more paragraphs and full of qualitative and quantitative information. There will be four answer choices to choose from, and you will have to select A, B, C, or D. Not every single multiple choice question will be considered in the calculation of your score. BEC contains 12 pretest multiple choice questions, which means they will not be graded. Therefore, only a maximum of 60 multiple choice questions will be used to calculate your score. The AICPA may remove additional questions if they are deemed to be unfair.
Task-based simulations – Will consist of a prompt, exhibits, and then one more tasks that you must complete. These tasks consist of dropdowns, calculations, etc. Of the 4 simulations, 1 will be a pretest and will not count towards your score.
Written communication tasks – Will consist of a prompt and you must respond with a written essay. The Universal CPA review course will teach you a repeatable format that you can use to efficiently and effectively respond to this prompt. You must know how to write with proper business English. This means that your written communication response must be concise and to the point, and free from any grammar issues or typos.
BEC consists of 5 total testlets. The first two testlets consist entirely of multiple choice questions, with 62 multiple choice questions in each testlet. The third and fourth testlet contain 2 task-based simulations each (total of 4 simulations), and then the last testlet contains 3 written communication tasks. You will also have a period of 10 minutes before your exam starts to go through the welcome and confidentiality screen. At the end of the 4 hour exam, there is a post-exam survey you will out, which takes about 5 minutes.
While Universal CPA Review aligns with the AICPA blueprint for the BEC CPA exam, you should still be familiar with the BEC blueprint. The AICPA blueprint is essentially an outline of all the different topics that can be tested, the skillsets required for each topic, and the weighting of each topic.
A. Enterprise risk management (ERM)
B. Internal controls
C. Business processes
A. Economic and business cycles — measures and indicators
B. Market influences on business
C. Financial risk management
A. Capital structure
B. Working capital
C. Financial valuation methods and decision models
A. Understanding of information technology (IT)
B. Risk associated with IT
C. Controls that respond to risks associated with IT
D. Data management and relationships
A. Financial and non-financial measures of performance management
B. Cost accounting
C. Process management
D. Planning techniques
BEC will be heavily impacted by the CPA Evolution. BEC is currently one of the four sections that must be passed to obtain the CPA license.
As part of the CPA Evolution (effective January 1, 2024), BEC will be split up into three disciplines and will no longer be one of the CORE sections that a candidate must pass. Instead, a CPA candidate must pass one of the three disciplines.
While its unclear on whether it will be easier to pass one of the disciplines or the current BEC exam, the Universal team advises you to do whatever you can to pass BEC by December 31, 2023.
As mentioned in our FAR CPA Exam guide, we recommend taking BEC after you have passed FAR (and probably AUD). With BEC having one of the higher the pass rates, it is better to knock out the harder CPA exam sections first with the 18-month timeline requirement. Many CPA candidates also prefer the change in pace that BEC brings when it comes to learning the material.
At a high-level, your timeline will consistent of working through each module in the Universal CPA course. Each module has been designed to cover certain blueprint topics. Each module will have a video lecture, study guide, multiple choice questions (with video explanations), and possibly a task-based simulation (if applicable).
There are a variety of different strategies you can take for each module, but the general approach is to watch the video lecture, and then work through the multiple choice questions, and watch the video explanations. You can utilize the study guide (textbook) to review what you learned in the lecture. For the task-based simulations, you can work through them after completing the multiple-choice questions, or you can revisit the simulation during your cumulative review.
We recommend doing cumulative practice tests on a weekly basis at a minimum (typically on the weekends). This means that if you have covered material from Chapters 1, 2, and 3, then you should perform a cumulative practice test over all 3 chapters at once. This will not only help with retention of the information, but it will also help you learn to get comfortable with seeing topics in no particular order. Watch our video tutorial on how to set up a cumulative practice test and why they are so important!
Looking for some tips specific to the BEC CPA exam? Here is a list of tips we put together to help you pass BEC:
1) Pretend you are a business owner – You will quickly realize that BEC has loads and loads of formulas. Do you think the AICPA really cares if you know how to plug numbers into a formula and calculate a result? The AICPA does expect you to know how to perform these calculations, but that isn’t the purpose of the CPA license. With the CPA license, you are expected to be able to interpret the results of the calculations and offer insight and advice. Remember, as a CPA, you are being paid for your ability to interpret complex financial and non-financial information. If you pretend that you own a business, then you will learn to interpret these complex topics at a level that is needed to understand these complex topics. That is what the AICPA will test you on! The explanation videos in the Universal course will help you learn to think like a business owner!
2) Understand the output of each formula – As mentioned above, BEC will include a lot of formulas that you are expected to know. While many candidates simply try to memorize all of these formulas, if you start to think about the output of the formula and how it is used, then it will be easier to remember the actual formula. For example, for days sales outstanding (DSO), if you knew that we could use sales and accounts receivable information to understand how long it takes for a company to collect cash from their customers for outstanding invoices, that will make it easier to remember the inputs to the DSO formula. While you will not be given the formulas for multiple-choice questions, you will be given analytic and valuation formulas for the task-based simulations.
3) Carefully read each detail in a question – This seems pretty obvious, but most candidates realize that they did not fully understand the question after they realize they got it wrong. If you miss a piece of information or incorrectly use information, then you perform a calculation and arrive at the wrong answer option. In order to arrive at the correct answer, you will have to properly include or exclude each piece of information in your series of steps. The explanation videos in the Universal course will help you understand how to use each piece of information in the question!
4) Use your mental map – The multiple-choice questions and task-based simulations in BEC will typically require you to perform a series of calculations to arrive at the correct answer. The Universal CPA course will include a mental map for each topic that will help you learn a series of repeatable steps you can perform on exam day.
5) Use Microsoft Excel – The multiple-choice questions and simulations will often provide a table of qualitative information. If you copy this into Excel, and then use Excel to perform your calculations, you will minimize the risk of error. If you a proficient in Excel, you will also be more efficient, which will allow you to move through the exam at a better pace. For the exam, you will have full access to Microsoft Excel.
6) Don’t get intimidated by the Information Technology (IT) section – If you read message boards or talk to other candidates, they will tell you that their exam contained a lot of questions on information technology. The AICPA has been including a lot of new IT terms and definitions on the BEC CPA exam lately like cloud computing, cyber security, SQL commands (database management), etc. If you are like most CPA candidates and only took a basic information technology class in college, a lot of these terms and topics will be new to you. Most of the IT questions will be relatively straightforward and you can arrive at the correct answer through process of elimination. In addition, it doesn’t appear that IT questions have been impacting a candidate’s ability to pass BEC. In summary, just know you aren’t alone when it comes to trying to make sense of IT! Try to learn what you can and leave it at that! The Universal course uses visual learning for complex IT topics to help you see more than just text on a page!
7) Focus on the format of your written communication response – Many CPA candidates often focus too much on what they write versus how they write. The written communication is computer graded and focuses on whether your response includes keywords from the prompt, has a solid format, and is free from grammar issues and typos. It is very difficult to predict what the written communication prompt will be about, and it will likely be something that is very difficult to prepare for. For example, the prompt may ask for the pros and cons of utilizing cloud computing. Does the AICPA expect you to have a detailed understanding of cloud computing? No. The AICPA does expect you to be able to write a well formulated response to the prompt. During your preparation for the BEC CPA exam, focus on developing an approach for written communication rather than the actual topics that you could be asked about. The Universal CPA team has prepared a winning strategy for written communication that you can implement on exam day!
8) Spend most of your time on practice questions – CPA candidates that use the Universal CPA course will utilize the bite-sized video lectures to quickly learn the basics of each module, but then most of their time will be spent on the multiple-choice questions. Universal CPA students will watch the explanation video for each MCQ, which will go through the formulas and series of calculations that are needed to arrive at the correct answer. They will also learn how to interpret the results. Each MCQ basically has a mini-lecture video, which is way more valuable than one long lecture that doesn’t cover all of the nuances of a topic.
Earlier in the BE CPA exam guide, you learned the format of the the BEC CPA exam. The exam includes multiple-choice questions. task-based simulations, and written communication. You will have a total of 4 hours to complete the exam, but how much time should you spend on each question so you can complete the exam within the allotted time?
Multiple-choice questions – We recommend spending 105 minutes on the two multiple-choice testlets. Since there are 62 multiple-choice questions, you will need to average about 1.7 minutes per question. You will spend more time on difficult questions, but less time on the easier questions. It’s very important not to spend too much time on a particular question! If you don’t know the answer, give it your best shot, and then move on!
Task-based simulations – The next 60 minutes can be spent completing the 4 task-based simulations. This means you can spend an average of 15 minutes per simulation.
Written communication – The last 75 minutes (testlet #5) will be used to complete three written communication tasks. That means you can spend 25 minutes on average per task.
While you could see a simulation on just about any topic on the BEC blueprint, the list below represents topics that you should focus on during during your BEC preparation. Simulations on these topics are included in the Universal course. Since it is likely that each simulation will have multiple exhibits, we have included multiple exhibits in the Universal course so that you can learn how to navigate through exhibits in an efficient manner. This list is not meant to be comprehensive, but rather, it is intended to provide you direction and guidance and where you should focus your time and efforts.
1) Interpreting ratios – There are a lot of categories of ratios that the exam could test you on. This includes profitability ratios, liquidity ratios, working capital, and valuation ratios. The exam will often provide the information necessary for you to calculate the ratios, but that is the easy part. The hard part is using the ratios to make business decisions. For example, you may have to understand how taking a loan from a bank impacts the company’s working capital ratio. If you don’t understand how to interpret the ratios, then this type of simulation will be very difficult!
2) Weighted average cost of capital – If you don’t understand the components of WACC at a detailed level, then this simulation will be very difficult to answer! The WACC formula is whacky, but the Universal course uses a 4-step approach to simplify the calculation of the WACC for a company. The simulation may also require you to use the WACC to advise on whether the company should raise capital from issuing or equity or debt.
3) Variance analysis – Variances are difficult and a pain to keep straight! For any manufacturing company, it is extremely important for a company to use variance analysis to understand where they were favorable or unfavorable in a given period of time. The simulation would likely provide standards and actuals and require you to calculate different variances like the direct materials price variance, direct labor usage variance, or manufacturing overhead variance.
The bottom line is that the CPA BEC exam is very difficult to pass, but with the right approach, you can pass the BEC exam on your first attempt. With the Universal CPA course, you can be one of the many Universal students who have passed BEC on their first attempt, or passed BEC after adding the Universal course as a supplement to their existing review course. With the bite-sized video lectures and step-by-step explanation videos, you will be able to learn the previously AICPA released multiple choice questions at the depth that is necessary. Rather than memorizing information like other courses encourage, you will truly learn the intuition behind these complex topics. If you want to pass the BEC exam, then start a free 7-day trial today!
You’ll have full access to the Universal CPA platform! Click the button below to sign up for a free trial. No credit card required.
Unfortunately, there is not a set amount of study time that it takes to be sufficiently prepared to pass BEC . Every candidate will move through the material at a different pace. We generally suggest you plan for 100 to 125 hours of studying when you develop your initial study plan. This number might be lower if you have already taken other sections and have a good approach in place or you have prior audit experience.
Many CPA candidates think this, and while the pass rate averages 60%, there are plenty of CPA candidates that will tell you that BEC is NOT easy. My advice is to apply the same level of effort and rigor that you did when preparing for FAR or AUD. If you do this, then you will be part of the group that successfully passed BEC!
We recommend taking BEC after FAR and AUD. FAR should be your first section, and it makes sense to take AUD after FAR. From there, BEC can either be your third or fourth section.
Hopefully you only need to take BEC once! However, if you do fail, you can take it until you pass. With continuous testing, you no longer have to wait until the next testing window to sit for a retake.
There are 5 testlets on the BEC exam. Testlets 1 and 2 have 31 multiple choice questions each. Testlets 3 and 4 contains 2 simulations each (total of 4). Testlet 5 contains 3 written communication tasks.
This amounts to a total of 62 multiple choice questions, 4 simulations, and 3 written communication tasks. It is important to understand that there are pretest MCQs and simulations, which means they will not count towards your score. So if you see a question on a topic, do not panic as it could be a pretest question! Give it your best shot and then move on!
The pass rate for BEC has averaged around 61% over the last five years. BEC has a higher pass rate than AUD and FAR.
You will have 4 total hours to complete the exam. You will have an option 15 minute break after testlet #3 which does not count towards the 4 hour total.
Multiple choice questions will account for 50% of your score, with task-based simulations accounting for 35%, Written communication accounts for the remaining 15%.
This is one of the hardest questions about BEC to answer. Lately, candidates have been seeing simulations on just about any topic in BEC. In addition, the way a simulation is phrased on a particular topic can vary greatly as well! This is why its so important to think like a business owner as you will be better prepared for any type of simulation that the AICPA gives you!
Yes, BEC will undergo significant changes. BEC will no longer be a CORE section that a candidate must pass. Instead, BEC will be split up into 3 disciplines (BAR, ISC, and TCP) . Learn more about the CPA Evolution here.
If you are planning to study for other sections of the CPA exam soon, check out our detailed guides for AUD, FAR, and REG!