MB-920 Exam Questions and Answers

A company is implementing Dynamics 365 Finance and needs to configure a chart of accounts that supports multiple legal entities with different fiscal requirements. Which structure should be used?

Use a shared chart of accounts with separate fiscal calendars per legal entity.

A shared chart of accounts lets all legal entities post to one common account structure, while each legal entity retains its own fiscal calendar for period-based reporting. This satisfies the stem's requirement for multiple legal entities with differing fiscal requirements, since the chart itself stays consistent without forcing identical fiscal timing.

Use a single shared chart of accounts with one shared fiscal calendar.

Use main accounts only without dimensions.

Create a separate chart of accounts for each legal entity.

Why: A shared chart of accounts is the recommended approach in Dynamics 365 Finance when multiple legal entities must operate under different fiscal requirements. By sharing the chart of accounts but assigning separate fiscal calendars per legal entity, the organization maintains a consistent account structure across entities while allowing each entity to comply with its own fiscal year, period definitions, and closing schedules. This balances standardization with regulatory flexibility.

A company uses Dynamics 365 Finance and needs to create a vendor payment that includes a discount of $50 if paid within 10 days. The invoice is for $1,000. The payment is made on day 8. What should the payment amount be?

$1,000

$900

$950

A cash discount reduces the amount payable when settlement occurs inside the discount period. Day 8 falls within the 10-day window, so the $50 discount applies and the vendor receives $1,000 minus $50, giving $950. This satisfies the stem's condition that payment is made within 10 days.

$1,050

Why: The vendor payment is made within the 10-day discount period, so the $50 discount applies to the $1,000 invoice. The payment amount is $1,000 - $50 = $950. In Dynamics 365 Finance, this is handled through the cash discount setup on the vendor payment terms, which automatically calculates the discounted amount when the payment date falls within the discount window.

A company is implementing Dynamics 365 Finance and needs to automate the reconciliation of bank transactions. Which feature should be used to match bank statement lines with open bank document lines based on rules?

Bank account reconciliation

Payment proposal

Automatic settlement

Advanced bank reconciliation

Advanced bank reconciliation uses matching rules to automatically pair bank statement lines with open bank document lines, and supports reconciliation matching rules, so it satisfies the requirement to automate rule-based matching in Dynamics 365 Finance.

Why: Advanced bank reconciliation in Dynamics 365 Finance allows you to import bank statement lines and automatically match them to open bank document lines (such as checks, deposits, and transfers) using user-defined matching rules. This feature supports rule-based matching (e.g., by amount, date, or reference) and handles complex scenarios like partial matches or tolerance thresholds, making it the correct choice for automating bank transaction reconciliation.

You are the Dynamics 365 Finance administrator for a manufacturing company with multiple legal entities. The company uses intercompany transactions between Entity A (US) and Entity B (Germany). Entity A sells raw materials to Entity B. The transactions must be recorded in both entities' ledgers, and the intracompany trade must be eliminated during consolidation. Recently, the accounting team reported that intercompany transactions are not being eliminated correctly. Upon investigation, you find that the intercompany transactions were posted using separate purchase orders and sales orders, not through the intercompany module. The elimination process uses intercompany eliminations rules. What should you do to ensure proper elimination?

Recreate the transactions using the intercompany module and delete the original orders.

Intercompany eliminations rules only offset transactions generated through the intercompany module, which creates paired due-to and due-from entries. Recreating the orders there and removing the standalone purchase and sales orders restores that linkage, satisfying the elimination requirement.

Reverse the existing transactions and repost them with the same method.

Create manual elimination journal entries to correct the balances.

Adjust the elimination rules to match the existing transactions.

Why: The intercompany module in Dynamics 365 Finance is specifically designed to automatically generate matching transactions in both legal entities and to flag those transactions for elimination during consolidation. By recreating the transactions through the intercompany module, you ensure that the intercompany eliminations rules can correctly identify and eliminate the intercompany trade. Deleting the original orders removes the manually created purchase and sales orders that were not linked to the elimination process.

A manufacturing company is implementing Dynamics 365 Finance and wants to streamline its procure-to-pay process. They need to automatically generate purchase orders when inventory falls below a predefined level. Which feature should they configure?

Use procurement catalogs with punch-out to vendor

Configure purchase requisition workflow with auto-release

Set up reorder point planning and coverage groups

Reorder point planning with coverage groups automatically triggers planned purchase orders when on-hand inventory drops below the defined minimum, replenishing stock. This directly satisfies the requirement to generate purchase orders automatically once inventory falls below a predefined level.

Enable vendor collaboration for automatic ordering

Why: In Dynamics 365 Finance, reorder point planning combined with coverage groups is the standard mechanism to automatically generate purchase orders when inventory falls below a predefined threshold. Coverage groups define the replenishment strategy (e.g., min/max, coverage period), and when the on-hand quantity drops below the reorder point, the master planning engine creates planned purchase orders. This directly addresses the requirement to automate PO generation based on inventory levels.

All Describe the core capabilities of the finance and operations apps questions

A company's finance team reports that in the general ledger, the balance for the 'Office Supplies' account shows a credit balance of $500, but they expected a debit balance. What is the most likely cause of this discrepancy?

The period close process was run without finalizing

A voucher was posted with the wrong debit/credit sign

In Dynamics 365 Finance, the general ledger account for 'Office Supplies' is an expense account, which normally carries a debit balance. A credit balance indicates that a voucher was posted with the wrong debit/credit sign, such as entering a negative amount or selecting the wrong account type during transaction entry. This is the most common cause of a balance sign reversal in an expense account.

A reversing entry was posted incorrectly

A financial dimension was incorrectly assigned

Why: In Dynamics 365 Finance, the general ledger account for 'Office Supplies' is an expense account, which normally carries a debit balance. A credit balance indicates that a voucher was posted with the wrong debit/credit sign, such as entering a negative amount or selecting the wrong account type during transaction entry. This is the most common cause of a balance sign reversal in an expense account.

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Domain 2: Describe the core capabilities of the finance and operations apps

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A company uses Dynamics 365 Finance. The finance team needs to ensure that purchase invoices are automatically matched to purchase orders and product receipts before payment is processed. Which feature should be configured?

Fixed asset management

Workflow approval

Vendor collaboration portal

Accounts payable invoice matching

Accounts payable invoice matching enforces two-way or three-way matching, validating invoice lines against the purchase order and product receipt before payment. This directly satisfies the stem's constraint that invoices be automatically matched to both documents prior to payment processing.

Why: Accounts payable invoice matching (option D) is the correct feature because it automatically compares purchase invoice details (quantities, prices, charges) against the corresponding purchase order and product receipt. This three-way matching ensures that payment is only processed when the invoice matches the order and receipt, preventing overpayment and discrepancies.

A company uses Dynamics 365 Finance. The CFO wants to view financial data in real-time using dashboards. Which tool should be used to create these dashboards?

Microsoft Excel

SQL Server Reporting Services (SSRS)

Power BI

Power BI connects directly to Dynamics 365 Finance data and provides real-time dashboards, meeting the CFO's requirement. It offers native Dynamics 365 Finance content packs and direct query, unlike static exports or standard in-app workspaces that cannot deliver the requested live financial visualisation.

Power Apps

Why: Power BI is the correct tool because it provides real-time, interactive dashboards that can be embedded directly into Dynamics 365 Finance, allowing the CFO to visualize financial data with live updates. Unlike static reporting tools, Power BI connects to the finance data sources via OData or DirectQuery, enabling dynamic filtering and drill-down without requiring manual data refresh.

A company uses Dynamics 365 Project Operations. The project manager needs to track actual hours worked against budgeted hours for a fixed-price project. Which module should be used?

Resource management

Expense management

Time and attendance

Project management

Project management includes time entry, budget tracking, and variance analysis for projects.

Why: In Dynamics 365 Project Operations, the Project management module (specifically the Project Planning and Tracking area) is the correct place to monitor actual hours worked against budgeted hours for a fixed-price project. This module provides the project manager with a view of planned vs. actual effort, allowing them to track progress and ensure the project stays within the fixed budget.

A company uses Dynamics 365 Finance. The controller wants to enforce that all purchase requisitions over $10,000 require CFO approval. Which configuration should be used?

Purchase requisition workflow

The purchase requisition workflow in Dynamics 365 Finance enforces conditional approval routing, so requisitions exceeding $10,000 route to the CFO before commitment. Workflow configuration applies the threshold rule at document level, satisfying the controller's control requirement without manual intervention.

Budget control configuration

Audit policy rule

Configuration key

Why: A purchase requisition workflow is the correct configuration because it allows the controller to define a conditional approval step that triggers CFO approval when the requisition total exceeds $10,000. Workflows in Dynamics 365 Finance are designed to route documents through approval processes based on configurable conditions, such as monetary thresholds. This directly meets the requirement without altering budget control or audit policies.

A company wants to use AI capabilities to automatically categorize thousands of vendor invoices. Which Dynamics 365 Finance feature should be used?

Budget planning

Electronic reporting

Fixed assets

Invoice automation using AI Builder

AI Builder provides prebuilt document-processing models that extract header and line data from invoices, and Invoice automation in Dynamics 365 Finance applies them to post vendor invoices automatically, matching the requirement to categorise thousands of invoices.

Why: Invoice automation using AI Builder (option D) is correct because AI Builder provides prebuilt AI models, including invoice processing, that extract and categorize data from vendor invoices in Dynamics 365 Finance, enabling automated categorization at scale. Budget planning (A) is for creating and managing budgets, not document categorization. Electronic reporting (B) is for configuring and generating regulatory and business documents, not AI-based invoice classification. Fixed assets (C) manages asset records and depreciation, which is unrelated to invoice categorization.

All Describe Dynamics 365 Supply Chain Management questions

A company uses Dynamics 365 Commerce. Which TWO features are available to enhance the customer shopping experience online?

Product recommendations powered by AI

AI-driven product recommendations surface relevant items to shoppers based on browsing and purchase patterns, directly enhancing the online shopping experience. This is a native Dynamics 365 Commerce capability, satisfying the stem's requirement for features that improve the customer experience online.

Customer loyalty program

A loyalty programme lets retailers reward repeat purchases and redeem points, encouraging customers to return and buy more online. Dynamics 365 Commerce provides this natively, satisfying the stem's requirement for features that enhance the online customer shopping experience.

Purchase order management

Inventory counting

Vendor invoice processing

Why: Dynamics 365 Commerce includes AI-powered product recommendations that analyze customer behavior, purchase history, and browsing patterns to suggest relevant items, directly enhancing the online shopping experience. Option B is correct because the customer loyalty program feature allows retailers to create and manage loyalty schemes, points, and rewards, which increases customer engagement and repeat purchases online.

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Domain 3: Describe Dynamics 365 Supply Chain Management

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A manufacturing company is experiencing stockouts of a critical raw material despite maintaining high inventory levels. The procurement team places purchase orders based on historical usage, but demand has become erratic. Which action should the supply chain manager take to improve material availability without increasing inventory costs?

Increase safety stock percentages for all raw materials by 20%.

Set up a reorder point with dynamic safety stock calculation in Demand Planning.

Dynamic safety stock recalculates buffer levels as demand variability shifts, so reorder points rise during erratic periods and fall when demand stabilises. This improves availability of the critical raw material without permanently inflating inventory, unlike static historical-usage ordering.

Switch from purchase orders to blanket purchase agreements with the supplier.

Negotiate with the supplier to reduce lead time by 50%.

Why: Dynamics 365 Supply Chain Management's Demand Planning module can calculate dynamic safety stock based on forecasted demand variability and service level targets. This allows the system to automatically adjust reorder points in response to erratic demand patterns, improving material availability without simply increasing inventory levels across the board.

A company uses Dynamics 365 Supply Chain Management to manage its supply chain. The procurement manager notices that purchase requisitions are not being converted to purchase orders automatically as expected. The workflow for purchase requisitions is set to auto-approve for amounts under $1,000. Upon investigation, the manager finds that a requisition for $950 is stuck in 'Draft' status. What is the most likely cause?

The workflow requires budget approval for all requisitions.

The purchase requisition was rejected by the workflow.

The dollar limit for auto-approval is set to $900.

The purchase requisition has not been submitted for review.

Workflow auto-approval only triggers once a requisition enters the review process. A requisition still in Draft status has never been submitted, so the workflow never fires regardless of the $1,000 threshold. Submission is the prerequisite that moves it out of Draft.

Why: In Dynamics 365 Supply Chain Management, a purchase requisition must be explicitly submitted to trigger the workflow. Even if the workflow is configured for auto-approval, the requisition remains in 'Draft' status until the user clicks 'Submit'. The $950 requisition was never submitted, so the auto-approval process never started.

A company uses Dynamics 365 Supply Chain Management for warehouse operations. The warehouse manager wants to improve inventory accuracy and reduce the time spent on physical inventory counts. Which TWO actions should the manager take?

Implement cycle counting based on ABC classification.

Cycle counting based on ABC classification targets high-value, fast-moving items more frequently, so discrepancies surface continuously rather than during a disruptive full count. This directly satisfies the stem's goals: improved inventory accuracy and reduced time spent on physical inventory counts, since only a subset of stock is counted at any time.

Deploy handheld scanners to record inventory movements.

Handheld scanners capture inventory movements at the point of scan, feeding real-time quantity data into Supply Chain Management. This continuous, transaction-level recording keeps on-hand balances accurate, directly reducing the need for frequent physical counts and shortening those that remain. It satisfies the stem's goals of improved accuracy and less counting time.

Increase safety stock levels for fast-moving items.

Schedule full inventory counts at the end of each month.

Require daily counting of all inventory items.

Why: Option A is correct because cycle counting based on ABC classification lets the warehouse count high-value or high-velocity items more frequently while counting low-priority items less often, which directly improves inventory accuracy without the disruption of full counts. Option B is correct because handheld scanners capture inventory movements (receipts, picks, transfers) at the point of transaction, reducing manual data-entry errors and keeping on-hand quantities accurate in Dynamics 365 Supply Chain Management. Option C is not correct because raising safety stock addresses stockout risk, not counting accuracy or count time. Option D is not correct because monthly full physical inventories are time-consuming and do not reduce counting effort. Option E is not correct because daily counting of all items is operationally impractical and would increase, not reduce, time spent on counts.

Refer to the exhibit. A batch job for inventory closing failed. The error indicates open inventory transactions for item A-100. What should the supply chain analyst do to resolve the issue and allow inventory closing to complete?

Perform a physical inventory count for item A-100.

Change the batch job recurrence to run every hour.

Rerun the batch job immediately after the next scheduled run.

Post or cancel the open inventory transactions for item A-100.

Inventory closing cannot complete while open transactions exist for an item, because costing requires every issue and receipt to be settled before the period is locked. Posting or cancelling those outstanding transactions for item A-100 removes the blocking condition, allowing the closing routine to run and finalise inventory values.

Why: Inventory closing cannot complete while there are open inventory transactions (e.g., sales orders, production orders, or transfer orders) that have not been posted or canceled. The correct action is to post or cancel those open transactions for item A-100, which clears the blocking records and allows the inventory closing batch job to finalize. This is a standard prerequisite in Dynamics 365 Supply Chain Management for inventory close processes.

A manufacturing company uses Dynamics 365 Supply Chain Management. They want to improve inventory accuracy and reduce stockouts. Which TWO actions should they take?

Use cycle counting to regularly verify inventory.

Cycle counting verifies inventory in small, scheduled batches rather than halting operations for a full physical count. Regular verification catches discrepancies between recorded and actual stock early, so replenishment decisions rely on accurate on-hand quantities, directly reducing stockouts without disrupting production.

Implement ABC classification for all items.

Set safety stock levels for critical items.

Safety stock sets a buffer quantity above expected demand, so replenishment triggers before inventory reaches zero. For critical items with variable lead times or demand spikes, this buffer absorbs uncertainty, preventing stockouts when supply is delayed. It directly addresses the accuracy and availability goal in the stem.

Enable sales forecasting for all products.

Conduct annual physical inventory counts.

Why: Option A is correct because cycle counting continuously verifies inventory quantities on a rolling basis, catching discrepancies early and improving inventory record accuracy without shutting down operations. Option C is correct because safety stock acts as a buffer for critical items, absorbing demand and lead-time variability so those items do not stock out. Option B is not correct because ABC classification is a prioritization technique that helps focus counting and planning efforts, but by itself it does not directly verify inventory or prevent stockouts. Option D is not correct because sales forecasting supports demand planning but does not by itself ensure inventory accuracy or eliminate stockouts for critical items. Option E is not correct because annual physical inventory counts are infrequent and can allow errors and stockouts to persist throughout the year.