MB-920 Describe Dynamics 365 Finance Practice Test 11 — 15 Questions

Question 1

Which THREE of the following are valid configurations for intercompany accounting in Dynamics 365 Finance?

Accepted Answer

Elimination rules can be defined to automatically remove intercompany transactions during consolidation.. Option A is correct because Dynamics 365 Finance supports elimination rules that automatically remove intercompany transactions during consolidation, ensuring the consolidated financial statements do not double-count balances. Option C is correct because intercompany journals can be configured to post automatically to both the originating and the counterparty legal entities, using the Due to/Due from accounts. Option E is correct because intercompany sales orders and purchase orders can be automatically generated when an intercompany sales order is created, with the corresponding purchase order created in the counterparty legal entity. Option B is not required, since intercompany transactions can occur between legal entities using different accounting currencies, with currency translation handled by the system. Option D is not a valid requirement, because an intercompany transaction inherently involves two legal entities, not a separate legal entity for each transaction.

Answer

Intercompany transactions must use the same currency.

Answer

Each intercompany transaction must be posted to a separate legal entity.

Question 2

Which TWO of the following are capabilities of the General ledger in Dynamics 365 Finance?

Accepted Answer

Chart of accounts management. The General ledger in Dynamics 365 Finance is the core module that owns the chart of accounts, so option D (Chart of accounts management) is correct: you create and maintain the Chart of accounts, main accounts, account structures, and advanced rules there, and every posting references these accounts. Option E (Multi-currency accounting) is also correct because the General ledger defines the accounting currency, reporting currency, and additional currencies, and it handles exchange rate types, currency revaluation, and translation so transactions in foreign currencies post correctly. Option A (Asset depreciation calculation) belongs to Fixed assets, which uses depreciation profiles, books, and the depreciation proposal/calculation routines rather than the General ledger. Option B (Invoice matching) is an Accounts payable (and Procurement) capability performed via two-way, three-way, or four-way matching of invoice, PO, and product receipt. Option C (Budget cycle management) is handled by Budgeting (Budgeting > Setup > Budget cycles), not by the General ledger itself.

Answer

Asset depreciation calculation

Answer

Invoice matching

Answer

Budget cycle management

Question 3

Refer to the exhibit. A Dynamics 365 Finance system has a tax code configured as shown. A sales invoice line item has a unit price of 100.00 (excluding tax) and the tax code applies. What is the total invoice line amount including tax?

Accepted Answer

119.00. The tax code in the exhibit is configured with a value of 19.00, which represents a 19% sales tax rate. When applied to a line item with a unit price of 100.00 (excluding tax), the tax amount is calculated as 100.00 × 0.19 = 19.00. Therefore, the total invoice line amount including tax is 100.00 + 19.00 = 119.00.

Answer

110.00

Answer

138.00

Answer

100.00

Question 4

A company uses Dynamics 365 Finance with multiple legal entities. The finance team needs to enforce a consistent chart of accounts across all entities. Which feature should they use?

Accepted Answer

Shared chart of accounts. A shared chart of accounts in Dynamics 365 Finance allows multiple legal entities to use the same chart of accounts structure, ensuring consistency across entities. This feature enables centralized management of main accounts and financial dimensions while still allowing entity-specific settings. It is the correct choice for enforcing a consistent chart of accounts across all legal entities.

Answer

Financial dimensions

Answer

Legal entity override

Answer

Main account categories

Question 5

A company uses Dynamics 365 Finance. The accounts payable team needs to automatically calculate discounts based on payment terms when entering vendor invoices. Where should they configure the discount?

Accepted Answer

Payment terms. Payment terms in Dynamics 365 Finance define the discount percentage, discount period, and net due period for vendor invoices. Configuring the cash discount on the payment terms record allows the system to automatically calculate the discount when the invoice is entered and the terms are applied.

Answer

Procurement categories

Answer

Invoice policies

Answer

Vendor master

Question 6

A company uses Dynamics 365 Finance and wants to track budget funds availability before posting purchase orders. Which budget control configuration must be enabled?

Accepted Answer

Budget control. Budget control in Dynamics 365 Finance is the configuration that checks budget funds availability before a source document such as a purchase order is posted. Enabling budget control activates the checks against the defined budget register entries and dimension combinations, preventing overspending.

Answer

Budget plan

Answer

Budget register entry

Answer

Budget model

Question 7

A company uses Dynamics 365 Finance. The finance team needs to generate financial reports that combine data from multiple legal entities into a single report. Which tool should they use?

Accepted Answer

Financial Reporting (Management Reporter). Financial Reporting (Management Reporter) in Dynamics 365 Finance is specifically designed to create financial statements and reports that can consolidate data across multiple legal entities. It provides the ability to design row definitions, column definitions, and reporting trees that include multiple companies.

Answer

General ledger inquiry

Answer

Power BI

Answer

Excel integration

Question 8

A company uses Dynamics 365 Finance. The accounts receivable team needs to send payment reminders to customers automatically. Which feature should they configure?

Accepted Answer

Collection letters. Collection letters in Dynamics 365 Finance are used to automatically generate and send payment reminders to customers with overdue balances. The accounts receivable team configures collection letter sequences, which define when and how reminders are issued based on due dates and aging.

Answer

Customer payment journals

Answer

Interest notes

Answer

Invoice journals

Question 9

A company uses Dynamics 365 Finance. The finance team notices that the general ledger journal balance does not equal the sum of debits and credits. What could cause this discrepancy?

Accepted Answer

Unbalanced journal entry. An unbalanced journal entry, where total debits do not equal total credits, will cause the general ledger balance to not match the sum of debits and credits. Option A is incorrect because the voucher number series merely assigns identifiers and does not affect accounting balances. Option B is incorrect because posting profile configuration determines how transactions are posted to accounts but does not cause an imbalance if the journal entry itself is balanced. Option D is incorrect because user permissions control access rights, not the balancing of journal entries.

Answer

Incorrect voucher number series

Answer

Incorrect posting profile configuration

Answer

User permissions

Question 10

Which TWO actions can you perform using the Financial Reporting tool in Dynamics 365 Finance?

Accepted Answer

Combine data from multiple legal entities in a single report. Option A is correct because the Financial Reporting tool (formerly Management Reporter) is specifically designed to aggregate and consolidate financial data across multiple legal entities into a single report by using row, column, and tree definitions with the reporting entity hierarchy. Option E is correct because Financial Reporting provides built-in report templates for core financial statements such as the balance sheet and income statement, which can be generated directly from general ledger account balances. Option B is incorrect because vendor payment terms are configured in Accounts payable setup (Payment terms form), not in the Financial Reporting tool. Option C is incorrect because budget control rules are configured in Budgeting > Setup > Budget control, not in Financial Reporting. Option D is incorrect because journal entries are posted to the general ledger through General ledger journals, not through the Financial Reporting tool, which is read-only for reporting purposes.

Answer

Configure payment terms for vendors

Answer

Configure budget control rules

Answer

Post journal entries to the general ledger

Question 11

Which TWO features in Dynamics 365 Finance can help automate accounts payable processes?

Accepted Answer

Vendor invoice automation. Vendor invoice automation (C) is correct because it uses the Vendor invoice automation feature in Accounts payable to automatically match incoming vendor invoices to purchase orders and product receipts, run invoice validation, and route exceptions to workflow, thereby reducing manual AP data entry. Payment proposal (E) is correct because the Payment proposal/Vendor payment proposal process in Accounts payable lets you generate, review, and post vendor payment journals automatically based on criteria such as due date, cash discount, and payment method, which automates the outbound payment side of AP. Collections management (A) is incorrect because it is an Accounts receivable feature for managing customer collections, not vendor payables. Bank reconciliation (B) is incorrect because it reconciles bank statements to ledger transactions and does not automate vendor invoice or payment processing. Customer payment predictions (D) is incorrect because it is an Accounts receivable AI feature that predicts when customers will pay, which is unrelated to automating accounts payable.

Answer

Collections management

Answer

Bank reconciliation

Answer

Customer payment predictions

Question 12

A manufacturing company uses Dynamics 365 Finance and Operations. The finance team needs to ensure that all vendor invoices are approved by a manager before payment. What feature should be configured to enforce this approval workflow?

Accepted Answer

Vendor invoice workflow. The correct option is B, Vendor invoice workflow. In Dynamics 365 Finance and Operations, the Accounts payable module provides a dedicated Vendor invoice workflow that routes vendor invoices (including pending vendor invoices) through approval steps, such as manager approval, before they can be posted and paid. This directly enforces the finance team's requirement that all vendor invoices be approved by a manager prior to payment. Budget control configuration (A) only checks available budget funds and does not provide approval routing, financial journal workflow (C) applies to general ledger journal entries rather than vendor invoices, and the vendor collaboration workspace (D) is a portal for vendor interaction and does not itself enforce invoice approval.

Answer

Budget control configuration

Answer

Financial journal workflow

Answer

Vendor collaboration workspace

Question 13

A company needs to generate financial statements that comply with local accounting standards in multiple countries. Which Dynamics 365 Finance module should be used to define and manage these reporting requirements?

Accepted Answer

Financial reporting. The Financial reporting module in Dynamics 365 Finance is specifically designed to define, generate, and manage financial statements and regulatory reports, including support for multiple accounting standards and localized reporting formats. It provides row definitions, column definitions, and reporting trees that let organizations produce GAAP, IFRS, or country-specific statements from the same general ledger data. This makes it the correct module for multi-country compliance reporting.

Answer

Budgeting

Answer

General ledger

Answer

Accounts payable

Question 14

A company uses Dynamics 365 Finance and has multiple legal entities. They need to consolidate financial data from all entities into a single reporting entity for quarterly reports. What feature should be used to perform this consolidation?

Accepted Answer

Consolidations. The Consolidations feature in Dynamics 365 Finance is purpose-built to combine the financial data of multiple legal entities into a single consolidated legal entity for reporting. It supports specifying which entities to include, the consolidation period, and the accounts to consolidate. This is the standard mechanism for producing quarterly consolidated reports across legal entities.

Answer

Intercompany accounting

Answer

Financial reporting

Answer

General ledger

Question 15

A company using Dynamics 365 Finance needs to ensure that purchase orders exceed a certain amount require additional approval from a director. Which feature should be configured?

Accepted Answer

Purchase order workflow. Purchase order workflow in Dynamics 365 Finance allows configuration of conditional approval rules based on amount thresholds, so that POs exceeding a specified amount require director approval. Workflows are the standard mechanism for defining approval hierarchies and conditions in Finance and Operations apps.

Answer

Approval journal

Answer

Procurement and sourcing parameters

Answer

Budget manager role