Get ready to conquer the BEC section of the 2023 CPA exam with Wiley’s CPA 2023 Study Guide: Business Environment and Concepts.
Wiley's CPA 2023 Study Guide: Business Environment and Concepts is the accessible, complete study guide for any candidate preparing to pass the BEC exam in 2023.
Structured to help you understand all BEC domains on the latest CPA exam, this study guide contains comprehensive coverage of:
- Corporate Governance
- Economic Concepts and Analysis
- Financial Management
- Information Technology
- Operations Management
Fully updated for the 2023 CPA BEC exam, this guide offers the content and study tools you need to succeed before the CPA Evolution changes take effect.
Table of Contents
About the Authors ix
About the Business Professors xi
Welcome to Business Environment and Concepts xiii
Enterprise Risk Management, Internal Controls, and Business Processes 1
Internal Control Frameworks 2
Introduction to COSO, Internal Control, and the COSO Cube 2
17 Principles of Internal Control 7
Types and Limitations of Accounting Controls 11
Internal Control Roles and Responsibilities 14
Internal Control Monitoring - Purpose and Terminology 17
Internal Control Monitoring and Change Control Processes 21
Enterprise Risk Management Frameworks 27
Introduction to COSO Enterprise Risk Management: Strategy and Risk 27
ERM Components, Principles, and Terms 34
ERM Governance and Culture 37
ERM Strategy and Objective Setting 42
ERM and Performance 52
ERM Monitoring, Review, and Revision 62
ERM Communication and Reporting 66
Practical Steps for Starting an Enterprise Risk Management Initiative 72
Fraud Risk Management 77
Other Regulatory Frameworks and Provisions 84
Economics 89
Introduction to Economic Concepts 90
Microeconomics 94
Introduction and Free-Market Model 94
Demand 96
Supply 99
Market Equilibrium 102
Elasticity 105
Consumer Demand and Utility Theory 111
Inputs and the Cost of Production 113
Market Structure and Firm Strategy 117
Introduction to Market Structure 117
Perfect Competition 119
Perfect Monopoly 122
Monopolistic Competition 124
Oligopoly 126
Summary of Market Structure 128
Macroeconomics 129
Introduction to Macroeconomics 129
Aggregate Demand 131
Aggregate Supply 138
Aggregate (Economy) Equilibrium 140
Gross Measures - Economic Activity 142
Gross Measures - Employment/Unemployment 146
Business Cycles and Indicators 149
Price Levels and Inflation/Deflation 153
Money, Banking, and Monetary/Fiscal Policy 157
International Economics 164
Introduction and Reasons for International Activity 164
Issues at the National Level 167
Role of Exchange Rates 170
Issues at Entity Level 174
Currency Exchange Rate Issue 174
International Transfer Price Issue 179
Globalization 183
Introduction to Globalization 183
Globalization of Trade 186
Globalization of Production 190
Globalization of Capital Markets 192
Globalization and Power Shifts 196
Becoming Global 200
Business Strategy and Market Analysis 205
Introduction to Business Strategy and Market Analysis 205
Macro-Environmental Analysis 208
Industry Analysis 210
Entity/Environment Relationship Analysis 213
Generic Strategies 215
Summary and Extensions 219
Financial Management 223
Introduction to Financial Management 224
Concepts and Tools 225
Cost Concepts 225
Time Value of Money Tools 230
Interest Rate Concepts and Calculations 239
Financial Valuation 247
Introduction to Financial Valuation 247
Valuation Techniques - General 250
Valuation Techniques - CAPM 252
Valuation Techniques - Option Pricing 256
Valuation Techniques - Business Entity 259
Hedging and Derivatives 267
Capital Budgeting 275
Introduction and Project Risk 275
Evaluation Techniques 278
Introduction and the Payback Period Approach 278
Discounted Payback Period Approach 281
Accounting Rate of Return Approach 283
Net Present Value Approach 286
Internal Rate of Return Approach 289
Project Ranking 293
Capital Project Ranking Decisions 296
Financing Options 299
Introduction and Financial/Capital Structure 299
Short-Term (Working Capital) Financing 300
Introduction to Short-Term Financing 300
Payables 301
Standby Credit and Commercial Paper 304
Receivables and Inventory 306
Long-Term (Capital) Financing 309
Introduction to Long-Term Financing 309
Long-Term Notes and Financial Leases 310
Bonds 313
Preferred Stock 318
Common Stock 321
Cost of Capital and Financing Strategies 325
Working Capital Management 328
Introduction to Working Capital Management 328
Cash Management 330
Short-Term Securities Management 336
Accounts Receivable Management 340
Inventory Management 344
Current Liabilities Management 348
Ratios and Measures for Working Capital Management 349
Introduction to Ratio Analysis 349
Liquidity Measures 351
Operational Activity Measures 354
Financial Management Risk Concepts - Summary 357
Information Technology 361
Information Technology Governance 362
Risks and Controls in Computer-Based Accounting-Information Systems 362
The COBIT Model of IT Governance and Management 365
Introduction to Enterprise-Wide and Cloud-Based Systems 368
IT Functions and Controls Related to People 371
Data Governance and Data Management 375
Data, Metadata, and Data Integrity 385
Role of Information Technology in Business 391
IT and Business Strategy 391
Spreadsheet Design, Controls, and Abuse 393
Databases and Data Structures 397
Transaction Processing 401
Information Systems Hardware 405
Software, Data Warehouses, and Decision Support 407
Introduction to E-Business and E-Commerce 410
E-Commerce Applications 412
ERM for Cloud Computing 415
Mobile Device, End-User, and Small Business Computing 417
Emerging Technologies 420
Emerging Technologies in AIS 420
Data Analytics 424
Data Analytics 424
Big Data 430
Data Visualization 433
Statistics in Business Analytics 445
Simple Linear Regression in Business Analytics 453
Bitcoin and Blockchain 457
Artificial Intelligence and Machine Learning 462
Information Security/Availability Protection of Information 466
IT Security Principles 466
Managing Cyber Risk: Part I - Applying COSO Principles to Cyber Risk 469
Managing Cyber Risk: Part II - A Framework for Cybersecurity 472
IT Policies 478
Multi-Location System Structure 480
Computer Networks and Data Communication 482
The Internet - Structure and Protocols 486
Service Organizations - Service Auditors 488
Logical and Physical Access Controls 491
Logical Access Controls 491
Physical Access Controls 494
Encryption and Secure Exchanges 496
System Disruption/Resolution 500
Organizational Continuity Planning and Disaster Recovery 500
Backup and Restoration 503
Computer Crime, Attack Methods, and Cyber-Incident Response 506
Processing Integrity (Input/Processing/Output Controls) 510
Program Library, Documentation, and Record Management 510
Input and Origination Controls 512
Processing, File, and Output Controls 515
Accounting System Cycles 517
The Accounting System Cycle: Introduction 517
Revenue Cycle 520
Expenditure Cycle 524
Production Cycle 527
HR and Payroll Cycle 530
General Ledger, Reporting, and Financing Cycle 534
Systems Development and Maintenance 537
System Development and Implementation 537
Operations Management 541
Financial and Non-Financial Measures of Performance 542
Quality Management 542
Benchmarking, Best Practices, and the Balanced Scorecard 546
Competitive Analysis 551
Ratio Analysis 556
Risk Management 561
Performance Improvement Tools 564
Cost Accounting 569
Manufacturing Costs 569
Inventory Flow, Cost, Spoilage, and Scrap 573
Cost Behavior Patterns 578
Cost-Volume-Profit Analysis 582
Absorption and Direct Costing 592
Job Costing 599
Process Costing 604
Joint and By-Product Costing 611
Sales and Direct Cost Variance Analysis 614
Overhead Variance Analysis 621
Process Management 626
Non-Routine Decisions: Relevant Costs 626
Non-Routine Decisions: Special Decisions 632
Transfer Pricing 637
Activity-Based Costing and Process Management 641
Planning Techniques 647
Budgeting 647
Forecasting Techniques 652
Index 657
