BUSINESS ENVIROMENT AND CONCEPTS {BEC}
ACTUAL EXAM QUESTINS AND CORRECT ANSWERS
2025//WHAT YOU NEED TO PASS BEC EXAM//
What are the specific duties of the Board of Directors? - (answer)Among the
specific duties of the Board of Directors are the election,removal,and supervison
of officers.
Adoption,amendment, and repeal of bylaws, fixing management compensation,
initiating fundamental changes to the corporation's structure & declarations of
dividends.
Do the Board of Directors act individually in making decisions or taking action? -
(answer)No= Board of Directors are NOT individual agents and DO NOT make
individual decsions or act individually. They vote on issues collectively.
Why shouldn't Board of Directors declare dividends when a company can't pay
them? - (answer)Board of Directors should NOT declare dividends when a
company can't pay them because it would cause INSOLVENCY for the company.
Are Board of Directors FIDUCIARIES of the corporation and what is Fiduciary
responsibility? - (answer)Yes=Board of Directors are FIDUCIARIES and have
Fiduciary Responsibility=(The responsibility of acting in the best interest of the
corporation.)
Are officers "agents" of the corporation and do they have Fiduciary Responsibility
and what is Fiduciary Responsibility? - (answer)Yes= Officers are agents of the
corporation and CAN act individually. They are ALSO fiduciaries which means they
MUST act in the best interest of the corporation.
,Can Officers serve on the Board of Directors and are they required to be
shareholders to be on the Board of Directors? - (answer)YES=Officers can serve on
the Board of Directors and are NOT required to be shareholders of the
corporation.
What are the 2 major issues covered by the Sarbanes-Oxley Act of 2002 (SOX)? -
(answer)The 2 Major issues covered by the Sarbanes-Oxley Act of 2002 (SOX) are;
1) Corporate Responsibilty.
2) Enhanced Financial Disclosures.
What are Public Companies also known as (AKA)? - (answer)Public Companies are
also known (AKA) as ISSUERS.
Are Public companies required to have Audit Committees? - (answer)Yes= Public
companies ARE required to have Audit Committees.
Who does the External Auditor report to? - (answer)The External Auditor reports
to the Audit Committee.
What are the Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
required to do for the Sarbanes-Oxley Act of 2002 (SOX)? - (answer)The Chief
Executive Officer (CEO) and Chief Financial Officer (CFO are required to sign off on
published reports and represent that the reports are truthful and neither include
falsehoods nor exclude material information. They ARE personally liable on
financial information of company.
, What are the CEO and CFO required to represent? - (answer)The Chief Executive
Officer (CEO) and Chief Financial Officer (CFO) are required to represent that the
reports are truthul and neither include falsehoods or exclude material
information.
What are the potential penalites for a CEO and CFO if they falsify information
contained within the financial statements? - (answer)The potential penalties for
falsifying financial statements for a CEO or CFO include jail time, fines and
returning bonuses paid to them, and returning gains made on the sale of stock.
What are 4 disclosures that the Sarbanes-Oxley Act of 2002 (SOX) requires for
Enhanced Financial Disclosures? - (answer)Title IV Enhanced Financial Disclosures
require the following 4 disclosures;
1) Management must assess the organization's internal controls and make
discloures of that assessment.
2) Issuers MUST disclose that managers are subject to a code of ethics.
3) Audit Committees MUST have a Financial Expert.
4) The name of the Financial Expert MUST be disclosed.
How long does the Sarbanes-Oxley Act of 2002(SOX) require auditors of issuers to
retain their workpapers? - (answer)Title VII(7) Corporate and Criminal Fraud
Accountablity Require:
1) Auditors of issuers should retain all audit and review workpapers for a period
of 5 years. (Failure to keep WILL result in fine, imprisonment of NOT more than 10
years, or both.)
ACTUAL EXAM QUESTINS AND CORRECT ANSWERS
2025//WHAT YOU NEED TO PASS BEC EXAM//
What are the specific duties of the Board of Directors? - (answer)Among the
specific duties of the Board of Directors are the election,removal,and supervison
of officers.
Adoption,amendment, and repeal of bylaws, fixing management compensation,
initiating fundamental changes to the corporation's structure & declarations of
dividends.
Do the Board of Directors act individually in making decisions or taking action? -
(answer)No= Board of Directors are NOT individual agents and DO NOT make
individual decsions or act individually. They vote on issues collectively.
Why shouldn't Board of Directors declare dividends when a company can't pay
them? - (answer)Board of Directors should NOT declare dividends when a
company can't pay them because it would cause INSOLVENCY for the company.
Are Board of Directors FIDUCIARIES of the corporation and what is Fiduciary
responsibility? - (answer)Yes=Board of Directors are FIDUCIARIES and have
Fiduciary Responsibility=(The responsibility of acting in the best interest of the
corporation.)
Are officers "agents" of the corporation and do they have Fiduciary Responsibility
and what is Fiduciary Responsibility? - (answer)Yes= Officers are agents of the
corporation and CAN act individually. They are ALSO fiduciaries which means they
MUST act in the best interest of the corporation.
,Can Officers serve on the Board of Directors and are they required to be
shareholders to be on the Board of Directors? - (answer)YES=Officers can serve on
the Board of Directors and are NOT required to be shareholders of the
corporation.
What are the 2 major issues covered by the Sarbanes-Oxley Act of 2002 (SOX)? -
(answer)The 2 Major issues covered by the Sarbanes-Oxley Act of 2002 (SOX) are;
1) Corporate Responsibilty.
2) Enhanced Financial Disclosures.
What are Public Companies also known as (AKA)? - (answer)Public Companies are
also known (AKA) as ISSUERS.
Are Public companies required to have Audit Committees? - (answer)Yes= Public
companies ARE required to have Audit Committees.
Who does the External Auditor report to? - (answer)The External Auditor reports
to the Audit Committee.
What are the Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
required to do for the Sarbanes-Oxley Act of 2002 (SOX)? - (answer)The Chief
Executive Officer (CEO) and Chief Financial Officer (CFO are required to sign off on
published reports and represent that the reports are truthful and neither include
falsehoods nor exclude material information. They ARE personally liable on
financial information of company.
, What are the CEO and CFO required to represent? - (answer)The Chief Executive
Officer (CEO) and Chief Financial Officer (CFO) are required to represent that the
reports are truthul and neither include falsehoods or exclude material
information.
What are the potential penalites for a CEO and CFO if they falsify information
contained within the financial statements? - (answer)The potential penalties for
falsifying financial statements for a CEO or CFO include jail time, fines and
returning bonuses paid to them, and returning gains made on the sale of stock.
What are 4 disclosures that the Sarbanes-Oxley Act of 2002 (SOX) requires for
Enhanced Financial Disclosures? - (answer)Title IV Enhanced Financial Disclosures
require the following 4 disclosures;
1) Management must assess the organization's internal controls and make
discloures of that assessment.
2) Issuers MUST disclose that managers are subject to a code of ethics.
3) Audit Committees MUST have a Financial Expert.
4) The name of the Financial Expert MUST be disclosed.
How long does the Sarbanes-Oxley Act of 2002(SOX) require auditors of issuers to
retain their workpapers? - (answer)Title VII(7) Corporate and Criminal Fraud
Accountablity Require:
1) Auditors of issuers should retain all audit and review workpapers for a period
of 5 years. (Failure to keep WILL result in fine, imprisonment of NOT more than 10
years, or both.)
