MB-920 Practice Exam 63 — 20 Questions

Question 1

A company uses Dynamics 365 Supply Chain Management with the Warehouse Management module. They receive goods from multiple vendors and need to put them away efficiently. The warehouse uses a directed putaway strategy based on location profiles and unit load constraints. The warehouse manager wants to optimize putaway by grouping similar items together in the same zone. You need to configure the system to automatically direct putaway to appropriate locations based on location profile and unit load. You have the following options: A. Configure location directives for putaway with appropriate query criteria for location profiles and unit load constraints. Set up work templates to create work for putaway. B. Use the mobile device menu items to manually select locations for each item. C. Use the Inventory management module to set up location groups and manually assign items to locations. D. Use the Product master to assign a default location for each item. Which option should you choose?

Accepted Answer

Configure location directives for putaway with appropriate query criteria for location profiles and unit load constraints. Set up work templates to create work for putaway.. Option A is correct because location directives and work templates automate the putaway process based on location profiles and constraints. Option B is incorrect because manual selection is inefficient. Option C is incorrect because location groups are not for directed putaway. Option D is incorrect because default locations are for manual storage.

Answer

Use the Product master to assign a default location for each item.

Answer

Use the Inventory management module to set up location groups and manually assign items to locations.

Answer

Use the mobile device menu items to manually select locations for each item.

Question 2

A small business uses Dynamics 365 Supply Chain Management to manage inventory. They currently sell products from a single warehouse. The owner wants to start tracking the cost of goods sold (COGS) for each product using the standard costing method. You need to set up the system to calculate COGS correctly. You have the following options: A. Enable standard costing in the Inventory model group for each product and run the Inventory close process periodically. B. Use the FIFO costing method and run the Inventory recalculation. C. Use the Moving average costing method and rely on automatic posting to the general ledger. D. Configure the Product master to use the Purchase price as the cost price and post directly to COGS. Which option should you choose?

Accepted Answer

Enable standard costing in the Inventory model group for each product and run the Inventory close process periodically.. Option A is correct because standard costing requires setting the inventory model group to Standard cost and running Inventory close to calculate variances and COGS. Option B is incorrect because FIFO is a different costing method. Option C is incorrect because moving average is different. Option D is incorrect because using purchase price directly does not reflect standard costing methodology.

Answer

Use the FIFO costing method and run the Inventory recalculation.

Answer

Configure the Product master to use the Purchase price as the cost price and post directly to COGS.

Answer

Use the Moving average costing method and rely on automatic posting to the general ledger.

Question 3

A global manufacturer uses Dynamics 365 Supply Chain Management. They produce high-value machinery and need to track the exact materials used in each finished good for service and warranty purposes. The company uses discrete manufacturing with production orders. Currently, the system estimates material consumption based on the bill of materials (BOM), but actual consumption may vary due to scrap or rework. The company wants to capture actual material consumption in real time on the shop floor using handheld scanners. You need to configure the system to allow shop floor workers to report material consumption against a production order. You have the following options: A. Use the Production floor execution interface and enable the 'Report as finished' and 'Report as consumed' options on the production order. B. Use the Warehouse Management mobile app to perform a raw material picking and consumption process via a mobile device menu item. C. Use the BOM version to force exact consumption and ignore variances. D. Use the Inventory adjustments journal to manually reduce raw material inventory after production. Which option should you choose?

Accepted Answer

Use the Warehouse Management mobile app to perform a raw material picking and consumption process via a mobile device menu item.. Option B is correct because the Warehouse Management mobile app can be configured with a menu item for raw material picking and consumption, allowing real-time scanning. Option A is incorrect because the Production floor execution interface is for reporting progress and finishing, but consumption is typically handled via warehouse mobile devices. Option C is incorrect because forcing exact consumption does not capture actual usage. Option D is incorrect because manual adjustments are error-prone and not real-time.

Answer

Use the Production floor execution interface and enable the 'Report as finished' and 'Report as consumed' options on the production order.

Answer

Use the Inventory adjustments journal to manually reduce raw material inventory after production.

Answer

Use the BOM version to force exact consumption and ignore variances.

Question 4

A medical device manufacturer uses Dynamics 365 Supply Chain Management. They are subject to strict regulatory requirements requiring complete traceability of each device to its raw material lots. The company uses process manufacturing with batch orders. Each finished device has a unique serial number that must be linked to the lot numbers of all raw materials used. The company also needs to maintain a genealogy of components. You need to configure the system to capture this traceability. You have the following options: A. Enable serial tracking for the finished device and lot tracking for raw materials. Use the batch order to record the consumption of raw material lots against the serial number. B. Use the Product master to assign a serial number to the finished good and manually enter lot numbers in a free text field. C. Use the Warehouse Management module to create location labels that include serial and lot information. D. Use the Quality management module to create quality orders for each batch and associate them with serial numbers. Which option should you choose?

Accepted Answer

Enable serial tracking for the finished device and lot tracking for raw materials. Use the batch order to record the consumption of raw material lots against the serial number.. Option A is correct because it properly uses serial and lot tracking, and the batch order records consumption linking lots to the serialized finished good. Option B is incorrect because manual entry is not reliable and not integrated. Option C is incorrect because location labels do not capture traceability relationships. Option D is incorrect because quality orders are for inspections, not for traceability genealogy.

Answer

Use the Quality management module to create quality orders for each batch and associate them with serial numbers.

Answer

Use the Product master to assign a serial number to the finished good and manually enter lot numbers in a free text field.

Answer

Use the Warehouse Management module to create location labels that include serial and lot information.

Question 5

You are the system administrator for Contoso Ltd., a multinational manufacturing company implementing Dynamics 365 Finance. The company has three legal entities: Contoso US (functional currency USD), Contoso Germany (EUR), and Contoso Japan (JPY). The CFO requires that all purchase orders for raw materials be centrally managed from Contoso US, but the goods must be received directly at each legal entity's warehouse. Additionally, the CFO wants to ensure that intercompany transactions are automatically posted and eliminated during month-end consolidation. You need to configure the system to meet these requirements. What should you do?

Accepted Answer

Configure intercompany purchase orders with direct delivery from Contoso US to the other entities, and set up intercompany elimination rules for consolidation.. Option C is correct because using intercompany journals and setting up intercompany purchase orders with direct delivery and intercompany elimination rules meets the requirements: centralized purchasing, direct receipt, and automatic elimination. Option A is wrong because it relies on manual journals and does not automate elimination. Option B is wrong because inventory transfers do not handle purchase order centralization. Option D is wrong because creating separate purchase orders in each entity defeats the centralization requirement.

Answer

Create separate purchase orders in each legal entity and use manual journal entries to transfer costs to Contoso US.

Answer

Configure intercompany inventory transfers and use inventory journals to record movements between warehouses.

Answer

Set up intercompany journals to record transactions between legal entities and create elimination rules for consolidation.

Question 6

You are the Dynamics 365 Finance consultant for Contoso Ltd., a manufacturing company that uses standard cost inventory valuation. The company recently implemented a new production line for a high-volume product. The production manager reports that the actual manufacturing costs significantly exceed the standard costs set for the product. You need to analyze the variance and adjust the standard costs for future periods. The company requires that any adjustment to standard costs be effective from the start of the next fiscal year, which begins in three months. Additionally, the inventory on hand must be revalued at the new standard cost. What should you do?

Accepted Answer

Create a costing version with the new standard costs and set the effective date to the start of the next fiscal year. Then run a cost revaluation journal to revalue inventory at the new cost.. Option B is correct because using a cost revaluation journal revalues inventory and changing standard costs through the costing version allows the new costs to be effective from a future date. Option A is wrong because adjusting in the current period would not wait for the next fiscal year. Option C is wrong because posting variances to a variance account does not change the standard cost. Option D is wrong because inventory adjustment journals do not change standard costs.

Answer

Use an inventory adjustment journal to revalue the on-hand inventory to the new standard cost and change the item's standard cost in the item master.

Answer

Create a standard cost revaluation journal for the current period and update the standard cost in the costing version with immediate effect.

Answer

Post the manufacturing variances to a variance account and close the variances to cost of goods sold at year-end.

Question 7

You are a Dynamics 365 Finance consultant for Northwind Traders, a wholesale distribution company. The company uses Dynamics 365 Finance and is experiencing a problem with vendor payments. The accounts payable clerk reports that when running a payment proposal for a specific vendor, the system includes invoices that are not yet due. The company wants to pay invoices only on their due dates. You review the payment proposal setup and find that the payment proposal uses the default settings. You need to configure the payment proposal to include only invoices that are due on or before the payment date. Additionally, the company wants to apply a discount if payment is made within 10 days of the invoice date (a 2% cash discount). The payment terms must be set up accordingly. You need to ensure that the payment proposal correctly calculates cash discounts for early payment. What should you do?

Accepted Answer

Set the payment proposal date criterion to 'Due date' and set the offset to 0. Configure payment terms with a 2% discount if paid within 10 days.. Option A is correct. By setting the 'Date criterion' to 'Due date' with a 'Payment date' offset of 0, only invoices with due dates on or before the payment date are included. To correctly calculate cash discounts, the payment terms must be set up with the discount percentage and the number of days. Option B is wrong because 'Payment date' criterion uses the invoice date, not due date. Option C is wrong because 'Discount date' criterion is not standard; the system uses payment terms. Option D is wrong because setting offset would include future invoices.

Answer

Set the payment proposal date criterion to 'Due date' and set the offset to 30. Configure payment terms with a 2% discount.

Answer

Set the payment proposal date criterion to 'Payment date' and set the offset to 10. Configure payment terms with a 2% discount if paid within 10 days.

Answer

Set the payment proposal date criterion to 'Discount date' to include invoices where the discount date has passed. Configure payment terms with a 2% discount.

Question 8

A small business uses Dynamics 365 Finance for the first time. They have one legal entity, one currency (USD), and simple financial needs. They want to record daily sales, pay vendors, reconcile bank accounts, and generate financial statements. They have no intercompany transactions or complex manufacturing. You are setting up the system. What should you do to minimize configuration overhead?

Accepted Answer

Use the standard default configurations and only customize essential modules.. Option D is correct because using standard configurations for a single-entity scenario is the simplest and most efficient approach. Option A is wrong because the chart of accounts is required. Option B is wrong because multiple legal entities are not needed. Option C is wrong because intercompany setup is unnecessary.

Answer

Create a detailed chart of accounts with many segments for future expansion.

Answer

Set up multiple legal entities to separate financial data.

Answer

Configure intercompany accounting in case they expand later.

Question 9

You are a Dynamics 365 Finance administrator for a small business that uses Dynamics 365 Finance for financial management. The company has a single legal entity and uses the cash basis accounting method for tax purposes. The company recently hired a new accountant who is unfamiliar with the system. The accountant needs to record a vendor invoice for office supplies. The invoice is from a vendor already set up in the system. The invoice amount is $500, and the applicable tax rate is 8%. The accountant wants to ensure that the invoice is posted correctly and that the tax amount is calculated automatically. Which steps should the accountant take to record the vendor invoice?

Accepted Answer

Open the vendor invoice journal, select the vendor, enter the invoice number, invoice date, amount, and post. The tax will be calculated automatically.. Option A is correct because the vendor invoice journal is the standard method to record vendor invoices with automatic tax calculation. Option B is wrong because the general journal is not for vendor invoices. Option C is wrong because the purchase order is not needed for a simple invoice. Option D is wrong because the payment journal is for payments, not invoices.

Answer

Create a purchase order for the supplies, then post a vendor invoice based on the purchase order.

Answer

Open the general journal, select the vendor account, enter the debit and credit entries manually, and post.

Answer

Open the payment journal, select the vendor, enter the invoice details, and post the payment.

Question 10

You are a Dynamics 365 Finance administrator for a company that needs to generate financial reports in compliance with local GAAP. The company has multiple legal entities and wants to consolidate financial data into a single reporting entity. They also need to support multiple currencies and translation adjustments. The CFO wants to use a standard tool that integrates with Dynamics 365 Finance. Requirements: 1) Consolidate financial data from multiple legal entities. 2) Support currency translation. 3) Use a built-in tool. Which feature should you recommend?

Accepted Answer

Use the Consolidations module with currency translation settings.. Consolidations in Dynamics 365 Finance allow consolidation of multiple legal entities with currency translation. Financial reporting is for individual reports. Budgeting is for planning. Intercompany accounting is for transactions. Option A is correct.

Answer

Set up Budgeting with exchange rates.

Answer

Use Financial reporting with row definitions that sum across companies.

Answer

Configure Intercompany accounting to post balancing entries.

Question 11

You are a Dynamics 365 Finance consultant for a retail company that operates in multiple countries. The company uses Dynamics 365 Finance with the following configuration: The main legal entity is based in the United States (US), and there are subsidiary legal entities in Canada (CA) and the United Kingdom (UK). The finance team needs to generate consolidated financial reports that combine data from all three entities. Additionally, the company wants to automate the elimination of intercompany transactions during consolidation. The company also needs to comply with local tax reporting requirements in each country. The tax rates and rules change frequently, and the company wants to manage these changes without modifying the source code. You have set up the consolidation module and the tax engine. However, during the consolidation process, you notice that the intercompany transactions are not being eliminated, and the consolidated report shows double-counting. What should you do to automatically eliminate intercompany transactions during consolidation?

Accepted Answer

Configure elimination rules in the consolidation module to automatically generate elimination entries.. Option B is correct because elimination rules automate the removal of intercompany balances. Option A is wrong because manual journal entries are not automated. Option C is wrong because intercompany accounting is for transaction posting, not elimination. Option D is wrong because the consolidation online feature is for real-time consolidation but does not automatically eliminate.

Answer

Create manual journal entries to eliminate intercompany balances after consolidation.

Answer

Set up intercompany accounting to post elimination entries automatically.

Answer

Use the consolidation online feature to eliminate transactions in real time.

Question 12

You are a Dynamics 365 Finance consultant for a startup that needs to manage its financial operations. The company has a small accounting team and wants to automate bank reconciliation. They use multiple bank accounts and receive electronic bank statements in CSV format. Requirements: 1) Automatically import bank statements. 2) Match transactions automatically. 3) Use standard Dynamics 365 Finance features. Which configuration should you implement?

Accepted Answer

Configure a bank statement import source and define matching rules for automatic reconciliation.. Setting up bank statement import and automatic matching rules in the Cash and bank management module automates reconciliation. Option B is correct.

Answer

Create a data entity to import bank statements and use Excel to reconcile.

Answer

Use the 'Advanced bank reconciliation' feature with manual matching.

Answer

Enable the 'Bank reconciliation' workspace and manually enter statement lines.

Question 13

You are the finance system administrator for Contoso Ltd., a global manufacturing company with legal entities in the United States, Germany, and Japan. Each entity uses Dynamics 365 Finance and has its own chart of accounts due to local reporting requirements. The CFO wants to consolidate the financial results of all entities into a single consolidated report at the end of each month. Currently, the consolidation is done manually by exporting data to Excel, which is error-prone and time-consuming. The CFO wants to use the consolidation functionality within Dynamics 365 Finance. Additionally, intercompany transactions between entities are significant, and the CFO wants to automate the elimination of these transactions during consolidation. You need to design a solution that meets the following requirements:
- Use the Dynamics 365 Finance consolidation module.
- Automate the elimination of intercompany transactions.
- Allow each entity to maintain its own chart of accounts.
- Generate consolidated financial statements in the US GAAP format.

What should you do?

Accepted Answer

Create a separate consolidation legal entity, set up consolidation groups and accounts to map the different charts, and configure intercompany elimination rules.. Option C is correct. To consolidate with different charts of accounts, you must create a consolidation company that uses a chart of accounts for US GAAP, and set up consolidation groups and accounts to map the source accounts. Intercompany elimination rules can be defined to automate eliminations. Option A is wrong because it suggests changing all entities to use the same chart, which contradicts the requirement. Option B is wrong because Power BI is not the consolidation module. Option D is wrong because the consolidation company should not be used for daily transactions.

Answer

Define the same chart of accounts in all legal entities and then use the consolidation online functionality to consolidate.

Answer

Set up the German and Japanese entities as child companies under the US entity, and then run consolidation.

Answer

Use Power BI to connect to each legal entity's data and create consolidated reports with calculated columns to eliminate intercompany transactions.

Question 14

Northwind Traders uses Dynamics 365 Finance for financial operations. They have a high volume of vendor invoices (5000 per month). Currently, invoices are manually entered into the system. The AP team is overwhelmed and making errors. The company wants to implement automation using AI to capture invoice data from PDFs and emails, and automatically match them to purchase orders. They also want to set up approval workflows for invoices that do not match. You are the Dynamics 365 consultant. What should you recommend?

Accepted Answer

Implement Microsoft Dynamics 365 Invoice capture to automatically extract invoice data and use PO matching with approval workflows.. Option A is correct because the Invoice capture add-in uses AI to extract data from PDFs and emails, and can be integrated with Dynamics 365 Finance. It supports PO matching and workflow. Option B is wrong because Power Automate alone cannot perform OCR/AI invoice capture. Option C is wrong because manual entry is what they want to avoid. Option D is wrong because vendor collaboration does not automate invoice extraction.

Answer

Hire temporary staff to enter invoices and use a batch posting job.

Answer

Enable vendor collaboration so vendors can enter invoices directly.

Answer

Use Microsoft Power Automate to process invoices and send them to the AP team for manual entry.

Question 15

You are a Dynamics 365 Finance consultant for a medium-sized manufacturing company that recently implemented Dynamics 365 Finance. The company uses the perpetual inventory system with standard cost. They have encountered an issue where the inventory value in the general ledger does not match the inventory value in the inventory module. After investigation, you discover that some purchase order receipts were posted directly to the general ledger without updating inventory quantities. The CFO wants to ensure that inventory financial postings are always synchronized with inventory transactions. The company uses batch processing for inventory closing. They need a solution that prevents discrepancies in the future. Requirements: 1) Ensure that all inventory transactions update both inventory quantities and financial postings. 2) Minimize manual intervention. 3) Use existing Dynamics 365 Finance features. Which course of action should you recommend?

Accepted Answer

Enable the 'Post inventory to General ledger' parameter in Inventory and warehouse management parameters, and ensure that the 'Inventory closing' batch job runs regularly.. Enabling the 'Post inventory to general ledger' parameter ensures that inventory transactions automatically post to the general ledger. The 'Inventory closing process' recalculates inventory costs and corrects discrepancies. Other options do not address synchronization. Option A is correct.

Answer

Create a recurring batch job that compares inventory value in the inventory module to GL and posts adjusting entries.

Answer

Set the 'Inventory model' to 'FIFO' instead of 'Standard cost'.

Answer

Use the 'Inventory recalculation' report monthly and manually correct discrepancies.

Question 16

Your organization is a medium-sized manufacturing company that has recently implemented Dynamics 365 Finance. The company has two legal entities: Contoso Ltd. (the main company) and Contoso Manufacturing (a subsidiary). The finance department needs to process intercompany transactions where Contoso Ltd. sells raw materials to Contoso Manufacturing. The transaction must automatically create accounting entries in both legal entities: a sale in Contoso Ltd. and a purchase in Contoso Manufacturing. Additionally, the intercompany transactions must be tracked using a specific financial dimension called "IntercompanyPartner". You have set up the legal entities and the chart of accounts. The intercompany accounting setup has been configured with the appropriate due-to and due-from accounts. However, when you post a sales invoice from Contoso Ltd. to Contoso Manufacturing, no accounting entries are generated in Contoso Manufacturing. What should you do to ensure the intercompany accounting entries are created automatically?

Accepted Answer

Set up intercompany accounting rules that map the sales invoice to the purchase transaction.. Option C is correct because the intercompany accounting rules define the offset accounts and must be configured for automatic posting. Option A is wrong because the intercompany journal is for manual entries, not automatic. Option B is wrong because the general journal is also manual. Option D is wrong because financial dimensions are not the cause of missing entries.

Answer

Create an intercompany journal in Contoso Ltd. to record the transaction.

Answer

Post a general journal entry in Contoso Manufacturing to record the purchase.

Answer

Add the IntercompanyPartner dimension to the sales invoice.

Question 17

You are a Dynamics 365 Finance system administrator for a large manufacturing company. The company uses the 'Standard cost' inventory model and performs periodic inventory closing to recalculate standard costs. Recently, the finance team noticed that the inventory closing process is taking too long and sometimes fails, causing delays in month-end closing. They need to optimize the inventory closing process. The company has millions of inventory transactions per month. Requirements: 1) Reduce inventory closing processing time. 2) Ensure data integrity. 3) Use available Dynamics 365 Finance features. Which approach should you recommend?

Accepted Answer

Enable 'Use inventory close parallel processing' and schedule the closing batch job during off-peak hours.. Using the 'Inventory close' batch job with 'Recalculate' option and enabling 'Use inventory close parallel processing' can speed up the process. Option D is correct.

Answer

Switch to 'Moving average' inventory model to avoid closing.

Answer

Archive old inventory transactions to reduce data volume.

Answer

Run the 'Inventory recalculation' report instead of the closing process.

Question 18

You are a Dynamics 365 Finance consultant for a service company that uses the Project management and accounting module. They need to track project costs and revenue, and bill customers based on time and materials. The company wants to use the 'Work in process' (WIP) accounting method to recognize revenue as costs are incurred. They also need to automatically generate invoices based on project progress. Requirements: 1) Use WIP accounting for projects. 2) Automate invoice generation. 3) Use standard features. Which configuration should you set up?

Accepted Answer

Set up a project group with 'Time and material' project type, enable WIP accounting, and define billing rules.. Setting up project groups with WIP accounting and using project contract funding limits and billing rules allows automatic invoice generation based on progress. Option B is correct.

Answer

Enable 'Accruals' in project parameters and use periodic tasks to generate invoices.

Answer

Configure a project group with the 'Fixed-price' project type and use progress billing.

Answer

Use the 'Cost record' journal to post costs and manually create invoices.

Question 19

You are a financial analyst at Fabrikam Inc., a retail company using Dynamics 365 Finance. The company has a requirement to track expenses by department and project. Currently, the chart of accounts uses a single segment for main accounts. The CFO wants to add cost centers and projects as financial dimensions to provide more granular reporting. You need to configure financial dimensions without disrupting existing transactions. You also need to ensure that new dimensions are available for budgeting. What should you do?

Accepted Answer

Create new financial dimensions for cost center and project, activate them, and set up budget models to use these dimensions.. Option C is correct because activating dimensions and integrating them with budgets allows tracking and budgeting by department and project. Option A is wrong because using default dimensions does not enforce entry. Option B is wrong because deactivating dimension values would prevent tracking. Option D is wrong because restricting posting to existing dimensions would block new combinations, but the requirement is to add new dimensions.

Answer

Create new financial dimensions, activate them, and require dimension values on all journal entries. Then deactivate old dimension values.

Answer

Create new financial dimensions, then configure posting restrictions so that only existing dimension combinations are allowed.

Answer

Create new financial dimensions for cost center and project, then set them as default dimensions on the main account.

Question 20

You are a system administrator for a retail company using Dynamics 365 Finance. The company processes a large number of purchase orders and invoices daily. The accounts payable team wants to automate the matching of purchase order receipts with vendor invoices to reduce errors. You need to configure the system to perform three-way matching (purchase order, receipt, invoice). What should you do?

Accepted Answer

Enable three-way matching in Accounts payable parameters, and configure matching policies to validate prices and quantities.. Option B is correct because three-way matching is enabled in Accounts payable parameters and requires prices and quantities to match. Option A is wrong because two-way matching only matches PO and invoice. Option C is wrong because purchase agreements are for pricing, not matching. Option D is wrong because invoicing policies are not for matching.

Answer

Enable two-way matching in Accounts payable parameters, and set up matching tolerance.

Answer

Configure vendor invoice policies to require receipt confirmation before posting.

Answer

Set up purchase agreements with price tolerance, and use invoice matching validation.