What’s the Best Way to Study for the BEC Exam?

How I Scored a 98 in Three Weeks

By Kyle Ashcraft, CPA

If you’re studying for the BEC exam, then you’re probably wondering, “What is the best way to prepare for the BEC exam? Are there certain topics that I should spend more time on?” These questions are important to consider, given that the BEC exam is unique from the other three exams. In this article, I am going to share tips on how to approach the BEC exam while sharing my experience of how I scored a 98 on the BEC exam.

My CPA journey started in July of 2019. I knew I wanted to pass all four exams within 6 months. I took two months for FAR, one month for BEC, two months for REG, and one month for AUD. I spent an average of 20 hours studying per week, which included 2 hours Monday-Friday and 5 hours Saturday-Sunday. I scored a 95 on FAR, 91 on REG, 90 on AUD, and 98 on BEC. Given my passion for teaching and positive experience with the CPA exams, I decided to start Maxwell CPA Review to coach students on how to pass the CPA exams. With that, let’s get into the first tip for the BEC exam.

Let’s start out with the question, “How is the BEC exam structured, and how should I structure my studying?”

Here’s how I would summarize the BEC exam:

The BEC exam is a catch-all exam with a relatively small amount of content that covers a large range of topics. The BEC exam covers most areas at a surface level and a few areas at an in-depth level. One exam topic could be tested in numerous ways.

Because one topic can be tested in multiple ways, I don’t see the task-based simulations (TBS) as being very useful for BEC studying. My thought being, “Why should I spend 30 minutes on a TBS that might be asked completely differently on the exam, when I could instead get through 30 multiple-choice questions?” Throughout my BEC studies, I’m pretty sure I took less than 5 TBS.

Apart from MCQs, students should also focus on the definitions of BEC terms. In the information technology (IT) section, around half of the focus is on “remembering and understanding,” which is the lowest level of comprehension on the CPA exam. Terms to make sure you know include cloud computing, electronic data interchange (EDI), logical controls, and physical controls.

Earlier I mentioned “surface-level topics” and “in-depth topics,” so let me break out this concept. The topics that fall into the surface level for me include financial valuation methods, ratio analysis, decision-making, working capital management, microeconomics, enterprise risk management, and IT.

For example, within decision-making, students need to know how to define net present value, along with how to use it to accept or reject an investment decision. For ratio analysis, students need to know the major formulas, and what a change in that formula means.

The more in-depth topics you should thoroughly know include cost accounting, variance analysis, business processes, and internal controls. Cost accounting involves how we arrive at the costs for a product. This involves knowing the mechanics of the following cost accounting concepts: product costs vs period costs, inventory accounts (Raw Materials, Work-in-Process, Finished Goods), process costing (FIFO and weighted-average), job order costing, spoilage, and joint product costing.

An entirely new section of the BEC exam is on business processes (starting July 2021). This section incorporates elements of the audit exam, given that students now need to identify the key steps and documents in major business processes. For the revenue process, for example, students need to know the main steps, including receiving the sales order, delivering the goods, billing the customer, and collecting payment. Along with knowing the steps, students need to know about key documents like the bill of lading, remittance advice, and sales invoice.

Variance analysis involves knowing how to assess why our actual numbers differed from our budgeted (standard) numbers. For example, if direct materials were $5,000 more than we expected, then it’s either because our cost-per-labor-hour increased from our expectations, or the number of labor-hours-per-product increased. The most difficult section of variance analysis is on overhead variance.

You might be wondering, “How much should I focus on the written communications part?” I would first say, “Remember, the written communications section only counts for 15% of your exam score.” In contrast, the section on Enterprise Risk Management, Internal Controls and Business Processes covers up to 30% of the exam.

Second, it might not make much sense to study specifically for the written communications section. Because as you’re studying for the other parts of the BEC exam, you are inadvertently learning skills for the written communications section. For example, since you’re already learning about how debt financing and equity financing function differently, then if you get a writing prompt on the pros and cons of debt financing, you will already be prepared.

If you have trouble with writing, or English is not your native language, then spend time writing sample essays. Otherwise, I wouldn’t recommend spending much time on this section.

I hope that this article on how to approach the BEC exam has been helpful! I wish you the best of luck with your studies, and if you have any questions, then please reach out to me at MaxwellCPAreview@gmail.com.

Kyle Ashcraft, CPA (VT)

Kyle Ashcraft is a CPA that scored a 90+ on all four CPA exams. Kyle founded Maxwell CPA Review, which is an exam-prep company that offers one-on-one tutoring for the CPA exams. Kyle can be reached at MaxwellCPAreview@gmail.com or by visiting MaxwellCPAreview.com.