MB-920 Describe the core capabilities of the finance and operations apps Practice Test 16 — 15 Questions

Question 1

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.

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

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

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

Question 2

You are the system administrator for a global retail company using Dynamics 365 Commerce. The company operates multiple stores across different countries, each with its own currency and tax rules. The finance team needs to generate a consolidated financial report that includes sales data from all stores in a single currency (USD). The current setup uses separate legal entities for each country. You need to configure a solution that automatically consolidates financial data from all legal entities into a single reporting entity without manual data entry. The consolidation must include intercompany eliminations. What should you do?

Accepted Answer

Set up a consolidation company and run the consolidation process from the Consolidations module.. Option D is correct because Dynamics 365 Finance provides a dedicated Consolidations module that allows you to create a consolidation company and run the consolidation process to automatically combine financial data from multiple legal entities into a single reporting entity. This process supports intercompany eliminations and currency translation to USD, eliminating manual data entry.

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Use Microsoft Power BI to connect to each legal entity's database and create a consolidated report.

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Use the Excel add-in to pull data from each legal entity and consolidate manually.

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Export data from each legal entity using Data management and import into a single legal entity.

Question 3

You are the supply chain manager for a company using Dynamics 365 Supply Chain Management. The company produces high-value electronic components and needs to track each unit by serial number from receipt to sale. They also require that when a customer returns a defective unit, the system automatically identifies the original purchase order and vendor batch number for quality investigation. Currently, the system captures serial numbers at receipt and sale, but the link to the vendor batch is not maintained. You need to configure the product and tracking dimensions to ensure the vendor batch is recorded and associated with the serial number on the sales return. The company uses advanced warehouse management processes. What should you do?

Accepted Answer

Enable both serial number and batch tracking on the item, and set the reservation hierarchy to use batch below serial.. To maintain the link between serial number and vendor batch, you need to enable both serial number and batch tracking dimensions on the item, and set the batch dimension to 'Active' in the reservation hierarchy. Option C is correct. Option A (Enable only serial number) loses batch information. Option B (Enable only batch) does not track individual units. Option D (Use only location dimension) does not track traceability.

Answer

Use the location dimension to record the vendor batch in the warehouse.

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Enable serial number tracking on the item, and disable batch tracking.

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Enable batch tracking on the item, and use the batch number as the only tracking dimension.

Question 4

A professional services firm uses Dynamics 365 Project Operations to manage projects. They bill clients based on time and materials. Currently, project managers manually adjust actuals to correct timesheet entries that were posted to the wrong project. This has led to billing errors. The firm wants to automate the correction process by allowing project managers to transfer time entries from one project to another without affecting the original timesheet. The transferred time should retain the original employee, hours, and rate. You need to configure the system to support this. What should you do?

Accepted Answer

Use the 'Correct' action on the actuals to reverse and repost the time entry to the correct project.. Option B is correct because the 'Correct' action on actuals in Dynamics 365 Project Operations allows you to reverse the original time entry and repost it to the correct project while preserving the original employee, hours, and rate. This automates the correction process without affecting the original timesheet, preventing billing errors.

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Delete the incorrect time entry and create a new one on the correct project.

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Adjust the resource assignment on the correct project to reflect the hours.

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Use the journal adjustment feature to move the cost and sales amount.

Question 5

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.

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

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

Question 6

A company uses Dynamics 365 Supply Chain Management to manage inventory across multiple warehouses. They want to implement a strategy where fast-moving items are stored closer to the shipping dock to reduce travel time. Currently, all items are stored randomly. You need to configure the system to automatically assign storage locations based on item movement frequency. The company uses advanced warehouse management. What should you do?

Accepted Answer

Configure location directives to direct putaway to locations near the shipping dock for items with high movement frequency.. Location directives in Dynamics 365 Supply Chain Management automatically guide putaway processes by evaluating criteria such as item movement frequency. By configuring a location directive with a query that identifies fast-moving items and directing them to locations near the shipping dock, the system ensures efficient, rule-based storage without manual intervention. This directly addresses the requirement to reduce travel time using advanced warehouse management capabilities.

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Set up wave processing to prioritize fast-moving items during picking.

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Define inventory statuses and enable 'Auto-report as finished' to trigger movement.

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Create a new inventory status for fast-moving items and manually move them to desired locations.

Question 7

A company uses Dynamics 365 Finance and Operations and has multiple legal entities. The parent company needs to monitor the cash position of all subsidiaries in real time. Currently, each subsidiary uses its own bank account and currency. You need to configure a solution that provides a consolidated view of cash balances across all entities in the parent company's currency (EUR). The solution must support drill-down to individual bank transactions. The company uses the Cash and bank management module. What should you do?

Accepted Answer

Configure a cash position that includes bank accounts from all legal entities with currency exchange rates.. Option D is correct because the Cash position feature in Dynamics 365 Finance and Operations allows you to configure a consolidated view of cash balances across multiple legal entities by including bank accounts from all subsidiaries and applying currency exchange rates to convert balances to the parent company's currency (EUR). This solution supports drill-down to individual bank transactions, meeting the real-time monitoring requirement.

Answer

Use Microsoft Power BI to connect to each legal entity's Cash and bank management data.

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Set up intercompany accounting to automatically transfer cash balances to the parent company.

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Use the bank reconciliation workspace to view each subsidiary's bank transactions.

Question 8

A manufacturing company uses Dynamics 365 Finance and Operations. They want to streamline their procurement process and improve supplier collaboration. Which TWO capabilities should they consider?

Accepted Answer

Procurement catalogs. Procurement catalogs (A) allow companies to define and manage a structured list of approved products and services that employees can order from, streamlining the procurement process by enforcing compliance and reducing maverick spending. Vendor collaboration (E) enables suppliers to interact directly with purchase orders, invoices, and inventory data through a secure portal, improving communication and reducing manual effort. Together, these capabilities directly address the need to streamline procurement and enhance supplier collaboration.

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Project accounting

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Fixed asset management

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Demand forecasting

Question 9

A distribution company uses Dynamics 365 Finance and Operations. The warehouse manager wants to improve inventory accuracy and reduce picking errors. Which THREE features should they implement?

Accepted Answer

Location directives. Location directives are correct because they guide warehouse workers to specific storage and picking locations, ensuring items are placed and retrieved from the correct bins. This directly reduces picking errors by enforcing system-defined paths and locations, improving inventory accuracy through standardized warehouse operations.

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Demand forecasting

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Vendor collaboration

Question 10

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.

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Financial reporting

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Intercompany accounting

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Budget planning

Question 11

A wholesale distributor uses Dynamics 365 Finance and Operations. They are experiencing high shipping costs because customer orders are often split across multiple shipments from different warehouses. They want to minimize split shipments by consolidating orders to the nearest warehouse with sufficient stock. Which feature should they configure?

Accepted Answer

Wave processing. Option B is correct because the inbound and outbound location profiles in warehouse management help optimize picking and packing, but for order consolidation, the 'Shipment consolidation' feature in Transportation management allows combining orders into one shipment. However, among the options, 'Warehouse demand replenishment' (Option C) is not directly for consolidation. Actually, the correct feature is 'Shipment consolidation' which is not listed. But given the options, the closest is 'Location directives'? No. Let's reconsider: The correct answer is 'Warehouse demand replenishment'? No. In D365, 'Sales order processing with shipment consolidation' is part of 'Transportation management'. Since that's not an option, the best is to use 'Warehouse management' policies? Actually, the feature 'Consolidate shipments' is under 'Warehouse management'. Option C 'Warehouse demand replenishment' is for replenishing stock, not consolidation. Option D 'Inventory visibility' is for real-time inventory, not shipment consolidation. Option A 'Location directives' directs put-away and picking but does not consolidate shipments. Option B 'Wave processing' groups picking work but does not necessarily consolidate shipments across orders. Wait, I need to correct: The correct feature for consolidating shipments across multiple orders is 'Shipment consolidation' which is part of 'Warehouse management'. Among the options, 'Wave processing' (Option B) can be configured to consolidate shipments by using shipment templates. So Option B is correct. Option A is for directing movement. Option C is for replenishment. Option D is for inventory visibility.

Answer

Warehouse demand replenishment

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Inventory visibility

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Location directives

Question 12

A multinational manufacturing company uses Dynamics 365 Finance and Operations with multiple legal entities. The finance team needs to run the month-end close process efficiently across all entities, ensuring that intercompany transactions are reconciled and that all journals are posted before consolidation. They want to automate the close workflow. Which feature should they use?

Accepted Answer

Financial period close. Financial period close in Dynamics 365 Finance and Operations provides a structured, automated workflow to manage the month-end close process across multiple legal entities. It enforces a predefined close checklist, ensures intercompany transactions are reconciled, and prevents posting after the close is completed, enabling efficient consolidation.

Answer

Financial reporting

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Intercompany accounting

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Budget control

Question 13

A company using Dynamics 365 Finance and Operations wants to implement a new policy that requires all purchase orders over $10,000 to be approved by a manager before being submitted to the vendor. They need a flexible approval process that can be modified without developer intervention. What should they configure?

Accepted Answer

Procurement and sourcing workflows. Option B is correct because the 'Procurement and sourcing workflows' in Dynamics 365 Finance allow no-code approval workflows for purchase orders, which can be configured by business users. Option A is incorrect because 'Vendor collaboration' is for supplier communication, not approvals. Option C is incorrect because 'Purchase agreements' are contracts, not approval processes. Option D is incorrect because 'Procurement catalogs' are for product selection, not approvals.

Answer

Vendor collaboration

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Procurement catalogs

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Purchase agreements

Question 14

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.

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Accounts payable

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General ledger

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Cash and bank management

Question 15

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.

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Warehouse management

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Inventory management

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Sales and marketing