MB-920 Describe Dynamics 365 Finance — 15 Questions

Question 1

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?

Accepted Answer

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

Answer

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

Answer

Use main accounts only without dimensions.

Answer

Create a separate chart of accounts for each legal entity.

Question 2

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?

Accepted Answer

$950. Option C is correct because 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.

Answer

$1,000

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$900

Answer

$1,050

Question 3

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?

Accepted Answer

Advanced bank reconciliation. 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.

Answer

Bank account reconciliation

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Payment proposal

Answer

Automatic settlement

Question 4

A company needs to ensure that purchase orders cannot be created without an approved vendor. Which configuration should be used?

Accepted Answer

Set 'Require approval for vendor' to Yes in Procurement and sourcing parameters. Setting 'Require approval for vendor' to Yes in Procurement and sourcing parameters ensures that a purchase order cannot be created unless the vendor is in an approved status. This configuration enforces a prerequisite check at the time of purchase order creation, preventing unapproved vendors from being used.

Answer

Create a purchase order approval workflow

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Enable 'Invoice matching validation'

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Set vendor status to Active

Question 5

A company uses Dynamics 365 Finance. The CFO wants to analyze actuals vs budget across multiple departments and cost centers. Which THREE components must be set up?

Accepted Answer

Budget model. The budget model is a required component because it defines the structure for how budget data is organized and calculated, such as by department or cost center. Without a budget model, the system cannot aggregate or compare actuals against budgeted amounts across different financial dimensions. It serves as the foundational framework for budget planning and analysis.

Answer

Budget control configuration

Answer

Budget register entries

Question 6

A company is configuring fixed assets in Dynamics 365 Finance. They need to ensure that asset depreciation is calculated differently for tax reporting and financial reporting. Which TWO actions must be taken?

Accepted Answer

Create multiple value models for the same asset.. In Dynamics 365 Finance, to calculate depreciation differently for tax and financial reporting, you must create multiple value models for the same asset. Each value model can then be assigned a separate depreciation profile, allowing distinct depreciation calculations for each reporting purpose.

Answer

Use a single depreciation book for both tax and financial.

Answer

Enable the 'Derived value models' feature.

Answer

Use a single value model with multiple depreciation profiles.

Question 7

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?

Accepted Answer

Recreate the transactions using the intercompany module and delete the original orders.. Option A is correct because 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.

Answer

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

Answer

Create manual elimination journal entries to correct the balances.

Answer

Adjust the elimination rules to match the existing transactions.

Question 8

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?

Accepted Answer

Set up reorder point planning and coverage groups. Option A is correct because reorder point planning in Dynamics 365 Finance automatically creates planned purchase orders when inventory reaches the reorder point. Option B is incorrect because vendor collaboration is for communication, not automated PO generation. Option C is incorrect because purchase requisition workflow requires manual approval steps. Option D is incorrect because procurement catalogs are for indirect procurement, not automated inventory replenishment.

Answer

Use procurement catalogs with punch-out to vendor

Answer

Configure purchase requisition workflow with auto-release

Answer

Enable vendor collaboration for automatic ordering

Question 9

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?

Accepted Answer

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.

Answer

The period close process was run without finalizing

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A reversing entry was posted incorrectly

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A financial dimension was incorrectly assigned

Question 10

A company uses Dynamics 365 Finance and needs to ensure that all vendor invoices are approved by the department manager before payment. Which feature should they use?

Accepted Answer

Configure vendor invoice workflows. Vendor invoice workflows in Dynamics 365 Finance allow you to define a business process that routes invoices for approval based on specific conditions, such as department manager approval. This feature ensures that invoices are reviewed and approved before payment is processed, meeting the requirement for managerial approval.

Answer

Set up payment schedules

Answer

Enable invoice matching validation

Answer

Create purchase order approval workflows

Question 11

A company using Dynamics 365 Finance notices that the trial balance does not balance because the 'Accounts Payable' account has a negative balance. What could be the reason?

Accepted Answer

A vendor payment was posted to the wrong vendor account. A negative balance in the Accounts Payable account typically indicates that credits (payments) exceed debits (invoices) for a vendor. Posting a vendor payment to the wrong vendor account creates a credit balance in the intended vendor's subledger without a corresponding invoice, causing the trial balance to be out of balance because the general ledger account reflects the payment but the subledger detail is misaligned.

Answer

A prepayment invoice was posted without a purchase order

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Intercompany transactions were posted incorrectly

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A bank reconciliation was not performed

Question 12

Drag and drop the steps to create a new customer record in Dynamics 365 Sales in the correct order.

Question 13

Drag and drop the steps to set up a new user in Dynamics 365 Finance and Operations in the correct order.

Question 14

Match each Dynamics 365 Finance module to its primary function.

Question 15

Match each Dynamics 365 Human Resources entity to its role.