Good accountants should know basic accounting debits and credits. But a CPA needs to have a broader view of business and that's why the AICPA along with each state Boards of Accountancy decided to add a new segment of the CPA exam called Business Environment and Concepts. This section replaced in part the less relevant Business Law segment.

The new section tests awareness of the general business environment and business constructs that exam candidates need to understand in order to interpret the underlying business causes for and the accounting implications of business transactions. What is more, the new section tests for skills needed to apply that awareness in performing financial statement audit and attestation work and other functions usually performed by certified public accountants that bear on the public interest.

The profession accepted the need for testing in this area of business knowledge because most look to certified public accountants to interpret business concepts. As is true for the entire CPA exam, these concepts are tested in the context of entry-level accountant practice.

There are five specific areas of Business Environment and Concepts that may be tested in detail on the CPA exam.