Business Environment and Concepts (BEC) is one of the four exams that you must pass to obtain your CPA license. Consequently, the BEC material covers many business management topics. The content areas tested in the BEC exam section of the Exam comprise corporate governance, economic concepts and analysis, financial management, information technology, and operations management and their different allocation percentages are mentioned in the table given below.
We see that Areas I and II are equally important and the exam tests for the maximum content in these areas. Economic Concepts and Analysis takes up 17-27% of the CPA exam and covers several topics related to Economic Concepts and Analysis. In this article, we will see the various topics that are tested in this area.
Economic and business cycles - measures and indicators
- The different business cycles: trough, expansion, peak, recession
- Conditions and government policies impacting an entity’s industry or operations
- Economic Measures and Indicators: Nominal and Real GDP, Consumer Price Index, Aggregate Demand Curve, and Money Supply
- Leading, coincident and lagging indicators: bond yields, new housing starts, personal income and unemployment
- Use of economic indicators to explain the impact of government fiscal policy, monetary policy, regulations, trade controls and other actions on an entity’s industry and operations
- Use of economic measures and indicators to explain the impact of exchange rates, inflation, productivity, state of the global economy, unemployment levels, etc. on business cycles and economic conditions, thereby impacting an entity’s industry and operations
Market influences on business
- Critical factors related to the economic marketplace: competition, currencies, globalization, supply and demand and trade
- Market influences: economic, environmental, governmental, political, legal, social and technological
- Impact of market influences on the overall economy: consumer demand, labor supply, market prices, production costs, and volatility
- Impact of market influences on an entity’s business strategy, operations, and risk: increasing investment and financial leverage, seeking new foreign and domestic markets, innovating to develop new product offerings, and undertaking productivity or cost-cutting initiatives
- Economic significance of business combinations and divestitures, product line diversification, production sourcing, and public and private offerings of securities
Financial risk management
- Market, interest rate, currency, liquidity, credit, price and other risks: use ratios and measures to quantify risks
- Means for mitigating/controlling financial risks: Identify strategies to mitigate financial risks and quantify their impact
The above article is aimed at informing CPA candidates about the syllabus covered in the BEC Exam. If you have any queries, feel free to comment in the section below. Happy Learning!
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