MB-920 Practice Exam 60 — 20 Questions

Question 1

You are implementing Dynamics 365 Finance for a multinational company that must comply with local tax regulations in multiple countries. The company plans to use electronic invoicing for all customer invoices. The finance team needs to configure tax codes, tax groups, and item tax groups to ensure correct tax calculation. Additionally, the company wants to use tax reporting codes to generate tax returns automatically. You need to design the tax setup. What should you do?

Accepted Answer

Create tax codes, tax groups, and item tax groups. Assign tax groups to customers and item tax groups to items. Configure tax reporting codes for tax authorities.. Option D is correct because tax codes define rates and rules, tax groups combine taxes for different jurisdictions, item tax groups define item-level tax, and tax reporting codes map to tax return boxes. Option A is wrong because it misses item tax groups. Option B is wrong because tax groups are not for item-level. Option C is wrong because tax reporting codes are needed for returns.

Answer

Create tax codes and tax groups. Assign tax groups to customers and set up item sales tax groups on items. Tax reporting codes are optional.

Answer

Create tax codes, then assign tax codes directly to customers and items. Use tax reporting codes for returns.

Answer

Create tax codes and tax groups. Assign tax groups to customers and item tax groups to items. Tax reporting codes are not required.

Question 2

You are a Dynamics 365 Finance administrator for a company that needs to manage fixed assets. The company purchases assets frequently and wants to automate the creation of fixed assets from purchase orders. When a purchase order for a fixed asset is invoiced, the system should automatically create a fixed asset record and post the acquisition cost. What should you configure?

Accepted Answer

On the purchase order line, set the 'Fixed asset acquisition' type, and enable automatic fixed asset creation in Fixed assets parameters.. Option B is correct because setting the 'Fixed asset acquisition' type on purchase lines and enabling automatic creation in Fixed assets parameters automates asset creation from purchase orders. Option A is wrong because integration with asset management is not for financial acquisition. Option C is wrong because manual creation is not automated. Option D is wrong because the asset inventory module is for tracking, not financial acquisition.

Answer

Use the asset inventory module to track assets and post acquisition costs to a general ledger account.

Answer

Create fixed assets manually from the Fixed assets module and post the acquisition using a fixed asset journal.

Answer

Set up integration between Dynamics 365 Finance and Dynamics 365 Asset Management to automatically create assets.

Question 3

You are a Dynamics 365 Finance functional consultant for a global retail chain that operates in multiple countries. The company uses Dynamics 365 Finance with a shared service center for accounts payable. They have a requirement to automatically route vendor invoices for approval based on the invoice amount and the vendor's credit limit. Invoices below $10,000 should be automatically approved if the vendor's credit limit is sufficient. Invoices above $10,000 must be approved by a manager. Additionally, invoices from new vendors must always be reviewed by the procurement team. The company uses the Vendor invoice automation feature. Requirements: 1) Automate invoice processing to reduce manual effort. 2) Ensure compliance with approval policies. 3) Use standard Dynamics 365 Finance configurations. Which configuration should you implement?

Accepted Answer

Create a vendor invoice workflow with conditional approvals based on amount and vendor status.. Setting up vendor invoice approval journals with workflow is standard. Workflow can handle amount-based and vendor-type conditions. The vendor invoice automation feature does not handle approval routing by itself. Option A is correct.

Answer

Use the Vendor invoice automation policy to automatically post invoices under $10,000 without approval.

Answer

Configure a vendor invoice policy in the Procurement and sourcing module.

Answer

Set up a payment hold rule for invoices from new vendors.

Question 4

You are the finance controller at Contoso Ltd., a service company that uses Dynamics 365 Finance for project accounting. The company has multiple ongoing projects, each with a budget. The project managers need to track actual costs against budget in real time. They also need to be able to forecast future costs and revenue for each project. The CFO wants to use the Project budget feature to control costs. You need to configure the system to meet these requirements. What should you do?

Accepted Answer

Set up project budgets with budget control, and use project forecasts to predict future costs and revenue.. Option C is correct because project budgets allow tracking actual vs budget, and budget control ensures costs do not exceed budget. Forecasting can be done using project forecasts. Option A is wrong because fixed-price projects do not allow flexible forecasting. Option B is wrong because expense journals are not for budget tracking. Option D is wrong because work breakdown structures are for task management, not budget control.

Answer

Create project budgets using the project budget control feature, and use expense journals to post costs.

Answer

Set up each project as a fixed-price project and use the project budget control feature to track costs.

Answer

Create a work breakdown structure for each project and use the project budget control feature to monitor costs.

Question 5

You are the finance manager for a company that uses Dynamics 365 Finance. The company has a requirement to process recurring invoices for subscription services. The finance team wants to automate the generation of recurring invoices at the beginning of each month. The recurring invoices should be based on a template that includes predefined line items and amounts. You need to configure the system to automate this process. What should you do?

Accepted Answer

Create a recurring invoice template with the subscription items, and set up a recurring invoice batch job to generate invoices on the first day of each month.. Option C is correct because recurring invoices are created from a template with a recurrence pattern. Option A is wrong because free text invoices are for occasional use. Option B is wrong because sales orders are for goods, not subscriptions. Option D is wrong because credit notes are for corrections.

Answer

Create a credit note template and use the 'Generate recurring credit notes' batch job to offset invoices.

Answer

Create free text invoice templates and use the 'Generate recurring invoices' batch job to create them on a schedule.

Answer

Create sales order templates and use the 'Create recurring orders' batch job to generate sales orders each month.

Question 6

You are a Dynamics 365 Finance functional consultant for a company that operates in a country where tax regulations require the use of tax codes with different rates for various goods and services. The company needs to ensure that sales invoices automatically calculate tax based on the item's tax group and the customer's tax exemption status. They also need to generate tax reports for authorities. Requirements: 1) Configure tax codes and groups for automated tax calculation. 2) Handle tax exemptions. 3) Use standard Dynamics 365 Finance features. Which configuration should you set up?

Accepted Answer

Create sales tax codes, sales tax groups, and item sales tax groups. Assign tax exemption certificates to customers as needed.. Setting up sales tax codes, sales tax groups, and item sales tax groups, and assigning tax exemption certificates to customers, allows automatic tax calculation and reporting. Option A is correct.

Answer

Use the 'Tax calculation' service in Dynamics 365 Finance.

Answer

Configure the 'General ledger parameters' to apply a default tax rate to all transactions.

Answer

Set up a custom workflow for tax approval on each invoice.

Question 7

You are the finance systems manager for a large manufacturing conglomerate using Dynamics 365 Finance. The company has multiple legal entities, each with its own chart of accounts. The CFO wants to consolidate financial results across all entities at month-end. The consolidation must eliminate intercompany transactions and adjust for differences in accounting standards (e.g., US GAAP vs IFRS). You need to design the consolidation process. What should you do?

Accepted Answer

Set up a consolidation company, configure elimination rules, and use currency translation to convert to the parent's reporting currency. Also, set up additional reporting currencies for IFRS adjustments.. Option D is correct because using consolidation companies with elimination rules and currency translation addresses multi-GAAP consolidation. Option A is wrong because exporting to Excel is not automated. Option B is wrong because reporting currencies are for single entity, not consolidation. Option C is wrong because it does not handle elimination or different accounting standards.

Answer

Create a consolidation company and run the consolidation process, which automatically eliminates intercompany transactions.

Answer

Export each entity's trial balance to Excel, manually adjust for intercompany transactions, and import into a consolidation company.

Answer

Set up reporting currencies in each legal entity to report in both GAAP and IFRS, and use Management Reporter for consolidation.

Question 8

You are a business analyst at Northwind Traders, a wholesale distribution company using Dynamics 365 Finance. The company processes a high volume of customer invoices daily. The accounts receivable team is spending too much time manually applying customer payments to open invoices. The CFO wants to automate the payment application process to reduce manual effort. You are evaluating the use of payment journal templates and payment proposals. What should you configure?

Accepted Answer

Set up payment proposals in the customer payment journal to automatically apply payments to open invoices.. Option A is correct because payment proposals can automatically apply payments to open invoices based on matching criteria. Option B is wrong because payment journal templates only set default values, not automation. Option C is wrong because settlement priority is a manual setting. Option D is wrong because it describes a manual process.

Answer

Configure settlement priority so that payments are automatically applied to the oldest invoice first.

Answer

Create payment journal templates that automatically post payments to the ledger.

Answer

Use the 'Apply payments' button on the customer payment journal to manually select invoices for each payment.

Question 9

You are an implementation consultant for a company that uses Dynamics 365 Finance. The company wants to automate the reconciliation of bank transactions with bank statements. The finance team currently manually matches bank statement lines to bank transactions in Dynamics 365 Finance. The CFO wants to use the advanced bank reconciliation feature to automate this process. What should you configure?

Accepted Answer

Enable advanced bank reconciliation, import bank statements, and configure matching rules to automatically match bank statement lines to bank transactions.. Option A is correct because advanced bank reconciliation uses matching rules to automate reconciliation. Option B is wrong because bank accounts are required, but the key feature is matching rules. Option C is wrong because cash flow forecasting is separate. Option D is wrong because it describes a manual process.

Answer

Set up bank accounts and manually upload bank statements each day.

Answer

Use the cash flow forecasting feature to predict bank balances and reconcile manually.

Answer

Create bank transaction journals and use the 'Reconcile' button to match each transaction.

Question 10

You are a system administrator for a company that uses Dynamics 365 Supply Chain Management. The warehouse manager reports that pickers are frequently going to the wrong locations for items, causing delays. The warehouse uses a directed putaway and picking process. Currently, location profiles are set up but not optimized. The manager wants to ensure that items are stored in locations that minimize travel time and that pickers are directed to the correct locations. The warehouse has 10,000 SKUs and high turnover. Which configuration should you implement?

Accepted Answer

Use the location stocking limits and zone-based slotting to assign items to optimal locations based on velocity.. Option B is correct because location stocking limits and zone-based slotting in Dynamics 365 Supply Chain Management allow you to assign items to optimal locations based on velocity (pick frequency). This ensures high-turnover items are stored in easily accessible zones, minimizing travel time and directing pickers to correct locations, directly addressing the warehouse manager's requirements.

Answer

Configure wave processing for order picking.

Answer

Implement barcode scanning for all warehouse transactions.

Answer

Set up location profiles with fixed locations for all SKUs.

Question 11

You are a Dynamics 365 Finance consultant for a company that is implementing Dynamics 365 Finance. The company has a requirement to track expenses by project and by department. They plan to use financial dimensions. However, the finance team is unsure how to set up the dimensions to meet both reporting needs. They want to ensure that all transactions can be analyzed by both project and department. The company has 50 departments and 200 active projects. Which configuration should you recommend?

Accepted Answer

Create separate financial dimensions for Project and Department. Assign both dimensions to all transactions.. Option C is correct because financial dimensions in Dynamics 365 Finance are designed to track multiple analytical categories independently. By creating separate dimensions for Project and Department and assigning both to all transactions, the company can report on expenses by either dimension or a combination of both, meeting the requirement without forcing a hierarchical or concatenated structure.

Answer

Use default dimensions on legal entity and override on each transaction.

Answer

Use account structures to embed department and project in the main account.

Answer

Create one financial dimension that combines project and department as a single value.

Question 12

A company using Dynamics 365 Finance and Operations wants to improve their accounts receivable process. They need to automatically send payment reminders to customers with overdue invoices and apply late payment penalties. What should they configure?

Accepted Answer

Collections management. Collections management in Dynamics 365 Finance and Operations is the dedicated module for automating the accounts receivable process, including sending payment reminders and applying late payment penalties. It provides configurable aging snapshots, collection agents, and automated workflows to trigger reminders and penalty calculations based on overdue invoice criteria.

Answer

Cash and bank management

Answer

Accounts receivable

Answer

Credit and collections

Question 13

A retail chain uses Dynamics 365 Finance and Operations. They are planning to expand to a new country and need to comply with local tax regulations, including VAT reporting and electronic invoicing. They want to leverage built-in capabilities rather than custom development. What should they configure?

Accepted Answer

Tax engine and Electronic reporting. The Tax engine and Electronic reporting (ER) are the built-in capabilities in Dynamics 365 Finance and Operations designed to handle complex tax regulations like VAT reporting and electronic invoicing. The Tax engine allows configuration of tax codes, rates, and rules for different jurisdictions, while Electronic reporting enables the generation of legally required electronic invoice formats (e.g., XML, EDI) without custom code. This directly addresses the need to comply with local tax regulations in a new country using out-of-the-box features.

Answer

Accounts payable

Answer

General ledger

Answer

Cash and bank management

Question 14

You are a finance manager for a multinational corporation using Dynamics 365 Finance. The company needs to comply with the new revenue recognition standard (ASC 606). They sell products and services in bundled contracts, and revenue must be allocated to performance obligations based on standalone selling prices. The system must automatically allocate the transaction price to each obligation and recognize revenue over time. Currently, the finance team manually calculates allocations in Excel. You need to configure Dynamics 365 Finance to automate revenue recognition for these bundled contracts. The company uses the Project management and accounting module for services and the Sales module for products. What should you do?

Accepted Answer

Configure the Revenue recognition module to create revenue schedules from sales orders and project proposals.. Option B is correct because Dynamics 365 Finance includes a dedicated Revenue recognition module that can automatically create revenue schedules from sales orders (for products) and project proposals (for services). This automates the allocation of transaction prices to performance obligations based on standalone selling prices, complying with ASC 606 without manual Excel calculations.

Answer

Create separate invoices for products and services and recognize revenue manually.

Answer

Use the General ledger allocation rules to distribute revenue amounts manually.

Answer

Set up revenue recognition schedules in the Project management and accounting module only.

Question 15

A global manufacturer uses Dynamics 365 Finance and Operations with multiple production sites. They need to manage complex bills of materials (BOMs) that include both manufactured and purchased components. They want to ensure that when a BOM is changed, the system automatically re-plans production orders and re-calculates material requirements. Which feature should they use?

Accepted Answer

Master planning. Master planning in Dynamics 365 Finance and Operations is the correct feature because it automatically recalculates material requirements and regenerates planned production orders when a bill of materials (BOM) is changed. It uses demand-driven or MRP-based logic to explode the BOM, net available inventory, and create new planned orders for both manufactured and purchased components, ensuring supply matches updated demand across multiple production sites.

Answer

Product configuration

Answer

Production control

Answer

Inventory management

Question 16

You are a Dynamics 365 consultant for a medium-sized manufacturing company that recently deployed Dynamics 365 Finance and Operations. The company uses the Production control module to manage manufacturing orders. They report that when a production order is started, the system does not automatically reserve raw materials from inventory, causing stockouts on the shop floor. The warehouse team manually reserves materials after the order is released. You need to configure the system so that raw materials are automatically reserved when a production order status is changed to 'Started'. The company uses standard cost inventory valuation. What should you do?

Accepted Answer

Set the 'Automatic reservation' field on the production order defaults to 'At start'.. Option A is correct because the 'Automatic reservation' field on the production order defaults controls when raw materials are physically reserved. Setting it to 'At start' ensures that when a production order status changes to 'Started', the system automatically reserves the required raw materials from inventory, preventing stockouts on the shop floor. This is a standard configuration in Dynamics 365 Finance and Operations for production control.

Answer

Set the 'Reservation hierarchy' on the item model group to 'Single level'.

Answer

Set the 'Default financial dimensions' on the finished good item to include the warehouse dimension.

Answer

Enable 'Auto-report as finished' on the bill of materials (BOM).

Question 17

A logistics company uses Dynamics 365 Finance and Operations to manage freight and transportation. They want to optimize delivery routes and reduce fuel costs by automatically consolidating shipments going to the same geographic area. Which feature should they enable?

Accepted Answer

Transportation management. Transportation management (option B) is the correct feature because it is specifically designed to handle freight and transportation operations, including route optimization and shipment consolidation. By automatically grouping shipments destined for the same geographic area, it reduces the number of trips, lowers fuel costs, and improves delivery efficiency. This capability is built into the Transportation management module of Dynamics 365 Finance and Operations.

Answer

Warehouse management

Answer

Inventory management

Answer

Sales and marketing

Question 18

A company uses Dynamics 365 Finance and Operations and wants to implement Copilot AI capabilities to assist users with financial analysis. They need to enable natural language queries against financial data, such as 'Show me the total revenue for this quarter compared to last quarter'. What should they enable?

Accepted Answer

Copilot in Dynamics 365 Finance. Option C is correct because Copilot in Dynamics 365 Finance is the specific AI-powered feature that enables natural language queries against financial data within the Dynamics 365 Finance module. It allows users to ask questions like 'Show me the total revenue for this quarter compared to last quarter' and receive answers directly from the underlying financial data, leveraging generative AI to interpret the query and retrieve relevant insights without requiring custom development or external services.

Answer

Financial reporting

Answer

Azure OpenAI service

Answer

Power BI integration

Question 19

A service company uses Dynamics 365 Finance and Operations and wants to track project costs against budgets in real-time. They need to automatically prevent further spending when a project exceeds its budget. Which feature should they configure?

Accepted Answer

Budget control. Budget control in Dynamics 365 Finance and Operations is the correct feature because it enables real-time tracking of project costs against budgets and can automatically prevent further spending when a budget threshold is exceeded. It enforces budget limits by checking available budget balances before transactions are posted, and can block or warn users when a project's budget is exhausted. This directly meets the requirement to stop spending automatically when a project exceeds its budget.

Answer

Expense management

Answer

Project accounting

Answer

Fixed asset management

Question 20

You are a functional consultant for a retail company deploying Dynamics 365 Finance and Operations. The client wants to manage their financial consolidation across multiple legal entities with different chart of accounts. They need to eliminate intercompany transactions automatically during consolidation. Which feature should you recommend?

Accepted Answer

Consolidation [Elimination]. The Consolidation [Elimination] feature in Dynamics 365 Finance is specifically designed to handle financial consolidation across multiple legal entities with different charts of accounts. It automatically generates elimination entries to remove intercompany transactions, ensuring that consolidated financial statements reflect only external activities. This directly meets the client's requirement for automated elimination during consolidation.

Answer

Financial reporting

Answer

Intercompany accounting

Answer

Budget planning