Last Updated: October 4, 2019

13  BEC Sample Questions

Here are 13 BEC sample questions with detailed answers that will give you an idea of the type of questions you can find our BEC test bank. We offer almost 500 up to date BEC questions that can help you improve your MCQ score.

1. RFJ Inc. has the following financial information about the three different sources of capital that the company uses:

Common stock  50% of Capital Structure, 3.6% Cost of Capital
Preferred stock 30% of Capital Structure, 6.4% Cost of Capital
Long-term debt 20% of Capital Structure, 8.4% Cost of Capital

To maximize shareholder wealth, the company should accept projects with returns greater than what percent?

A. 5.4%
B. 3.6%
C. 6.4%
D. 8.4%


The weighted-average cost of capital is equal to 5.4%. The weighted-average cost of capital is calculated as 5.4% = [(3.6% × 50%) + (6.4% × 30%) + (8.4% × 20%)]. Thus, in order to maximize shareholder wealth the company should accept projects with a return greater than the cost of capital.

2. Which of the following individuals would most likely not be considered as having the attributes of a financial expert as required in the SEC rules regarding audit committees?

A. University professor with a PHD in generally accepted accounting principles but little understanding of generally accepted auditing standards.
B. Former CFO of a multinational corporation with an understanding of audit committee functions and extensive knowledge of generally accepted auditing standards.
C. Government tax auditor with an understanding of generally accepted auditing standards and extensive knowledge of generally accepted auditing standards.
D. An accountant for a large non-profit with an understanding of internal controls and procedures for financial reporting.


A financial expert is not required to have an understanding of generally accepted auditing standards.

3. Which of the following is necessary in order to calculate the payback period for a project?

A. Accounting Rate of Return
B. Weighted Average Cost of Capital.
C. Annual Cash Flow.
D. None of the above.

To calculate the payback period you divide the initial investment by the annual cash flow.

4. The beta of a security would measure which type of risk?

A. Alpha risk.
B. Market risk.
C. Systematic risk.
D. Credit risk.


Beta is a measure of volatility or systematic risk of a security in comparison to the market as a whole.

5. Pickens Inc. is preparing a flexible budget for 2014. The company needs a breakdown of the cost of electricity used at its 3D printing factory producing 1000 commercial molds per month.

The company needs a breakdown into the fixed and variable elements. In the last 6 months of 2013, the cost of electricity used and direct manufacturing labor hours worked were:

Month Electricity Cost DMLH
July $4,300 1,300
August 3,100 1,050
September 6,400 1,900
October 9,200 2,950
November 7,500 2,170
December 8,900 2,650

Pickens Inc used the high-low points method of analysis. Therefore, the estimated variable cost of electricity per direct manufacturing labor hour should be:

A. $3.28
B. $2.95
C. $3.21
D. $3.11


This answer is correct. The high-low method determines the variable and fixed costs of a mixed cost. First you must find the variable rate using the formula:

Cost at high point – Cost at low point
———————————————————— = Variable rate
High activity point – Low activity point

The problem gives us the cost of electricity per month and the direct manufacturing labor hours (DMLH) used each month. Thus, you would input the cost and DMLH at the high points and lows points to find the variable cost of electricity per direct manufacturing labor hour.

$9,200 – $3,100
———————————- = $4.00/DMLH
2,950 – 1,050

6. Who is the most important stakeholder in a corporation in terms of corporate governance?

A. Creditors.
B. Management.
C. Shareholders.
D. Employees.


The board of directors is directly responsible for protecting and managing shareholders’ interests in the company. Corporate governance ensures that other stakeholders such as management or employees do not act at the expense of the shareholders.

7. The rate of unemployment caused people moving between jobs, careers, and locations is the:

A. Structural unemployment rate.
B. Frictional unemployment rate.
C. Cyclical unemployment rate.
D. Non-frictional unemployment rate.


Frictional unemployment is also known as the normal unemployment rate. Generally, frictional unemployment comes from workers changing jobs or careers.

8. In 2013, Rainbow Toys Inc. manufactured and partially completed the following number of units:

Beginning work in process 40% complete 800 units
Units started into production during the year 12,000 units
Units completed during the year 10,000 units
Ending work in process 10% complete 1500 units

Using the first-in, first-out (FIFO) method what was the number of equivalent units produced?

A. 8,770
B. 12,000
C. 10,000
D. 9,830


To calculate equivalent units produced you start with the units completed (10,000), minus equivalent units in beginning inventory (320 = 800 × 40%) plus the equivalent units in ending inventory (150 = 1500 × 10%). Therefore, the equivalent units are equal to 9830 (10,000 – 320 + 150).

9. What is the name of the individual responsible for monitoring internal controls within a company under the COSO framework?

A. Risk Assessment Officers.
B. Evaluators.
C. Enterprise Risk Management Supervisors.
D. Internal Control Managers.


Evaluators monitor internal controls.

10. A sales representative for a laser cutter manufacturer gives you the following proposal to make a capital investment in a new machine. The investment proposal shows the following

Initial cost $30,000
Life of Machine 7 years
Annual net cash inflows $5,000
Salvage value $2,000

If you invest in the machine you will depreciate the machine using the straight-line method. The payback period for this capital investment is:

A. 6 years.
B. 5.6 years.
C. 4.6 years.
D. 4 years.


To calculate the payback period you divide the initial investment by the annual net cash inflows. In this case it is 6 years ($30,000 ÷ $5,000).

11. A company that sells hand-made bracelets from Colombia via an online store is using a ___________ strategy:

A. Product differentiation.

B. Cost leadership

C. Integrates

D. Digitization


Competitors are unlikely to be able to sell the same type of bracelet since it is handmade and small batch.  Subsequently, this is an example of a product differentiation strategy

12. A large fortune 500 company is most likely to use what type of application software:

A. Operating System.

B. Central Processing unit.

C. Value-added network.

D. Enterprise resource planning.

Most medium to large businesses use enterprise resource planning (ERP) software as their main application software.

13.  The chief marketing officer undergoes an analysis of the most profitable customer accounts. He is most likely using which type of software:




D. Supply Chain Management

Answer: C

CRM is customer relationship management software.  Part of the function of CRM software is to determine which accounts are the most profitable.


If you want to more BEC sample questions you can find almost  500 BEC exam questions in our online test bank that you can download to any computer or smart phone.

Here is a breakdown of what you can expect on the BEC exam.

The BEC CPA exam is relatively straight forward. The BEC exam is the only section that does not have simulations. Subsequently, the multiple choice questions (MCQ’s) are of paramount importance.

You will have 90 total BEC questions with 90 seconds to answer each MCQ.

The topics covered on the BEC exam include:

  1. Business Structure
  2. Cost Management
  3. Economics Concepts
  4. Financial Management
  5. Information Technology
  6. Performance Measures
  7. Planning, Budgeting, Control and Analysis
  8. Risk Management and Capital Budgeting

You can find BEC sample questions for all of the topics above in our test bank.