The Business Environment and Concepts (BEC) section of the CPA exam tests’ candidates’ understanding of business concepts and the significance of a CPA’s role and responsibilities within the overall business environment. Accordingly, the BEC exam covers a wide range of topics, including corporate governance, economics, financial analysis, financial management, information systems and technology, strategic planning and operations management. In short, it tests your practical understanding of business and economics.
Despite the broad range of topics BEC is often considered one of the easier CPA exam sections and has a high pass rate, but don’t just assume you can sleepwalk through your CPA prep for this exam.
BEC is the only CPA exam section that includes written communication tasks: You’ll see 3 of them on exam day and they make up 15% of your total grade. Also, economics tends to be one of those hard-to-master topics for some candidates, so if you struggled with economics in college then BEC may be more challenging for you. Despite that, BEC does have a lower volume of material to cover than FAR and REG and should take you less time to prep for.
For this post, I’ve compiled everything you need to know about the BEC CPA exam, including the content covered, the format and structure of the exam, the types of questions you’ll see, time management and other helpful tips you’ll need to pass BEC on your FIRST TRY! Let’s take a look!
Contents
BEC CPA Exam Topics and Skills Tested
Which Topics are Tested on the BEC CPA Exam?
The BEC CPA exam covers five broad business concepts, referred to as “content areas”, as follows:
- Enterprise Risk Management, Internal Controls and Business Processes (20-30%)
- Economics (15-25%)
- Financial Management (10-20%)
- Information Technology (15-25%)
- Operations Management (15-25%)
To learn more about these content areas check out the CPA exam blueprints for yourself.
What CPA Exam Skills are Tested on BEC?
The CPA exam also tests range of higher order skills as opposed to simple memorization of facts and rules. The BEC CPA exam tests three primary skill levels, as follows:
As of July 1, 2021 the skill-level weightings for the BEC CPA exam are:
- Evaluation – 0%
- Analysis – 20-30%
- Application – 50-60%
- Remembering and Understanding – 15-25%
BEC CPA Exam Questions
You’ll see two types of questions on the BEC CPA exam:
- Multiple-choice questions,
- Task-based simulations, and
- Written communication
Each question type is graded slightly differently, MCQs make up 50% of your overall BEC exam score, while and TBSs (35%) and written communications (15%) make up the rest of your grade. BEC is the only exam with a written communication, so make sure you prepare for these!
BEC Exam Format and Structure
The BEC CPA exam consists of 5 testlets. The first 2 testlets include a total of 62 multiple-choice questions while the remaining 3 testlets include a total of 4 task-based simulations and 3 written communications. See below for how the BEC CPA exam is structured:
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BEC CPA Exam Testing Process
BEC Testlet Selection
The CPA exam uses a multi-stage adaptive testing approach for all of their multiple-choice testlets, which means your performance on the first MCQ testlet impacts the difficulty level of questions you’ll see on the second testlet.
Here’s an illustration of how this model works in practice:
Source: AICPA
As noted above, the first MCQ testlet will always be rated as “medium” difficulty, whereas the second MCQ testlet will be rated “difficult” or “medium” based on your testlet 1 performance. Also, the multi-stage adaptive testing approach only applies to the MCQ testlets and not the TBS simulations. The AICPA establishes the difficulty of task-based simulation testlets ahead of time so all of the TBS testlets will be the same difficulty level.
Operational vs. Pretest Questions
Another interesting aspect of the CPA exam is their use of “pretest” questions during the CPA exam. While most of the questions and simulations on the CPA exam are “operational” and count towards your exam grade, the AICPA also includes a handful of “pretest” questions on each exam that DO NOT count towards your exam score.
Why does the AICPA do this?
The AICPA is constantly developing new questions to keep up with new laws and accounting rules and needs a reliable way to determine whether new questions are fairly written or need improvement.
Including these “pretest” questions within the live CPA exam and seeing how candidates perform allows them to gauge whether these new questions are too easy or too difficult. Questions and simulations that pass a successful “pretest” trial period will eventually become “operational” questions on future exams.
How Long is the BEC Exam?
The BEC CPA exam is 4 hours long, with an optional 15-minute break between the third and fourth testlets that doesn’t count towards your exam time. You can take a break at any other point during the exam, but the clock will be running!
BEC CPA Exam Grading
How is the BEC CPA Exam Graded?
There’s a lot of confusion around how the CPA exam is graded so hopefully I can clear things up.
While MCQs (50%), TBSs (35%) and Written communications (15%) make up your overall BEC CPA exam grade, your final score isn’t simply the percentage of each question type you answered correctly. Here’s how each type of question is scored:
BEC Multiple-Choice Questions
MCQs are pass-fail, meaning there’s only 1 correct or “best” answer for each question and 3 incorrect ones. There’s no opportunity for partial credit on MCQs and no penalty for incorrect answers.
Due to the multi-stage adaptive approach on the MCQ testlets, your MCQ score depends on whether your second testlet was “difficult” or “medium” difficulty. In other words, MCQs from the “difficult” testlets are worth more than MCQs from “medium” difficulty” testlets when it comes to calculating your exam score.
That doesn’t mean one type of MCQ testlet is better than the other though. Mathematically speaking, you’re likely to get fewer “difficult” MCQs correct than “moderate” ones, so don’t worry if you think your second MCQ testlet is only a “medium” difficulty.
Many candidates get flustered on exam day because they think they did poorly on the first MCQ testlet, affecting their performance on later testlets. Don’t let this happen to you! Instead, keep a level head throughout the exam and just take whatever questions the exam throws your way.
Also, remember that the BEC exam includes several pretest questions that don’t count towards your exam grade. If you’re caught off guard by several questions and feel like you’re bombing the exam, chances are they’re just pretest questions and they won’t impact your score.
BEC Task-Based Simulations
TBSs don’t vary in difficulty like the MCQs, so each one is scored equally. Also, one TBS is a pretest simulation and doesn’t count towards your exam grade.
Given how the TBSs are structured you have the opportunity to earn partial credit on non-research TBSs. Try to follow the same advice here and answer each one completely and as best as you can, even if you’re unsure of the answer.
BEC Written Communications
Most written communication responses are scored by a computer program calibrated by human scorers. In some cases, responses are scored by a network of human graders (all CPAs).
If your score is close to the passing score, your written communication tasks will be automatically re-graded by human graders. When there is more than one grader for a response, the final grade is based on the average score.
What is a Passing Score on the BEC CPA Exam?
As with all CPA exam sections, a passing score for BEC is 75.
Is the CPA Exam Graded on a Curve?
No. All grading for the BEC CPA exam is performed electronically and automatically based on the weightings of the operational exam questions. There’s no bell curve or any other type of curve applied to the exam results.
BEC CPA Exam Tips
What are the BEC CPA Exam Pass Rates?
BEC has fairly consistent pass rate of 55-65%. Historically, this has given it the highest pass rate among the four CPA exam sections.
How Many Hours to Study for BEC CPA Exam?
I’ve written a whole separate article on this topic, but the TL:DR is this:
Most candidates should plan to spend at least 60-80 hours studying for BEC. Assuming you study ~15 hours each week, this translates to roughly 4-5 weeks of studying.
If you have some work experience and/or rocked your general business and economics courses in college then you may be on the lower end of this spectrum. Either way, BEC usually takes most candidates the least amount of time to prepare.
BEC CPA Exam Study Tips
- Don’t Assume BEC is Easy – Just because BEC may take you less time to prepare for than the other sections doesn’t mean it’s “easy”. BEC still takes several weeks to fully prepare for and covers a wide range of topics, so you’ll need to be on your game come exam day. Do yourself a favor and treat BEC just like you would any other CPA exam and don’t assume you can skate by with minimal effort.
- Time Management is Critical – BEC is the only CPA exam section that includes written communication tasks, and you’ll have to complete 3 of them. Given how MCQs, Simulations and WCTs all test different skills in different ways, so make sure you practice keeping a good pace during your practice exams and avoid spinning your wheels.
- Understand Financial Ratios Inside and Out – Financial analysis is a big part of the BEC exam, and the CPA exam loves to test how well you understand how they impact a business. It’s not enough to just memorize the formulas, you’ll also need to understand how ratios might correlate with each other and what they tell you about the health of the business.
- Practice Your Professional Writing – Even if you consider yourself to be a good writer you should still spend some time practicing the written communication tasks. Before diving in, make sure you understanding what the question is asking and then develop a plan to address it in a clear and concise manner. Put yourself in the shoes of the person you’re addressing (typically a client or a colleague) and think about of what they would expect to hear from a CPA. You want to address the question as directly as possible while avoiding making assumptions or blanket statements if the facts in the WCT do not support it. For example, if more information would be needed to give a definitive answer, then point out the different accounting treatments that could be possible and explain what additional information would be needed to make a determination.
When Should I Take BEC?
No matter which CPA exam you take first, I suggest taking BEC within your first 2 or 3 exams. This will allow you to gain exam experience and guard against any of your exams expiring.
Trust me, the last thing you want to do is ride the struggle bus on FAR or REG through a few retakes and still have BEC waiting for you at the end of your 18-month window.
Who is the BEC CPA Exam Easiest For?
BEC covers several broad business topics and less accounting-focused than the other sections. For that reason, the BEC CPA exam tends to be easier for candidates who did well in their Econ and general business courses during college.
That being said, BEC isn’t an easy exam. The BEC CPA exam is very broad and covers much more material than you might think, so it still takes some work to pass!
Who is the BEC CPA Exam Hardest For?
The BEC CPA exam tends to be more difficult for candidates who struggled with their general business and Econ courses during college.
If general business and Econ weren’t your strong suits in college, plan to spend an extra 1-2 weeks of study time to fully prepare for the BEC CPA exam.
Time Management for the BEC CPA Exam
Effective time management is a critical to passing the CPA exam, and BEC is no exception.
You only have four hours to complete all 5 testlets, so you’ll need to work through the exam at a brisk pace and not get stuck along the way, especially on the multiple-choice testlets. Trust me, not saving enough time for task-based simulations is a recipe for disaster!
Here’s how much time I recommend you spend on each testlet for BEC:
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These numbers are just my guidelines. You must complete an entire testlet before moving on to the next one, but you can complete individual questions or simulations within a testlet in any order.
To manage your time effective, aim to spend as little time as possible on the questions that you’re most confident about and more time on more difficult questions. To do this, try to stick with my four-step process:
Effective BEC MCQ Strategy
1) Carefully read each question to understand what’s being asked. To work as efficiently as possible, read last sentence first, then re-read the entire question from start to finish.
2) Make a first pass through each testlet with the goal of answering each question in 30 seconds or less.
The first testlet is at a moderate difficulty level. If you really know the material then this will be more than enough time. If you’re unsure of the answer then flag it or leave it unanswered and move on to the next MCQ.
This approach lets you to make a first pass through the whole testlet in about 20 minutes.
3) Revisit and try to answer each flagged or unanswered question, this time within 1 minute.
If you truly don’t know the material then there’s no sense in spinning your wheels. Make your best guess and move on.
For any MCQs where you’re still feeling uncertain, make your best educated guess and flag the question to revisit again.
Plan to spend no more than 20 total minutes on this step. Assuming you have about 12 questions to work through here, this step should only take another 10-15 minutes.
4) Make a third and final pass through flagged or unanswered questions. Give yourself up to 2 minutes on each question if you need.
This is when you need to make your best educated guess on any remaining questions in the testlet. Assuming you have 5-10 questions to work through this step can take another 10-20 minutes.
The above approach should allow you to complete each MCQ testlet in 35-50 minutes. After that, you can either triple-check a few MCQs or bank the time and move on to your next testlet.
Remember, if you perform well on the first MCQ testlet then the second MCQ testlet may be more difficult. If that’s the case, you may need a little more time to complete it.
Strategy for CPA Exam’s BEC Simulations and Written Communications
Dominate your BEC simulations by following these three simple steps:
- Before starting the task-based simulation testlets, note your total remaining exam time and divide it by 7. This is roughly how much time you have to complete each simulation and WC module.
Ideally, you should have at least 15 minutes for each TBS and WC, but pan to spend a bit more time if it’s a Document Review Simulation (DRS).
- Complete each simulation and written communication before moving on to the next one.
Unlike the MCQs, task-based simulations include several questions and calculations that revolve around an overarching scenario and fact pattern. Switching back and forth between simulations only increases the chances that you’ll mix up or forget key details.
- As you approach your budgeted time on each TBS and WC, assess how you’re doing and decide whether it’s worth completing or if you should make your best educated guesses and move on.
Simulations ultimately come down to time management. The worst thing you could do on the CPA exam is spin your wheels and take time away from later simulations, so don’t be afraid to cut bait and move on if you’re starting to struggle.
Just remember to fill out the entire simulation, as there’s no penalty for incorrect answers and you may even get partial credit!
BEC CPA Exam FAQs
The BEC CPA exam includes 62 multiple choice questions, 4 task-based simulations and 3 written communication tasks. These questions are spread across 5 total testlets (2 featuring multiple choice questions, 2 for task-based simulations, and 1 written communication testlet).
The BEC CPA exam often has a higher CPA exam pass rate than any other section, but it’s far from easy. It covers a broader range of topics than most other sections, including financial analysis, economics, technology, and more. Many candidates fall into the trap of assuming it’s going to be easy and not setting aside enough time to properly prepare for this section. Even if you feel confident about the subject matter, plan to set aside at least 60-80 hours of study time over a 4-5 week period to properly prepare for the BEC CPA exam.
Other CPA Exam Sections
Learn more about the other CPA exam sections here:
Still Need a CPA Review Course?
Whether you’re just starting to prepare for BEC or you already took it and failed, having the right CPA review course by your side will work wonders for your exam prep.
All of the CPA prep courses featured on this site are top notch. I suggest going with the one that best fits your learning style and how you learn best.
Check out which CPA review course is best for you and get to cracking on BEC as soon as you can!
