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

Question 1

Your organization is implementing Dynamics 365 Finance and needs to manage the financial operations of multiple legal entities. Which module is the primary tool for recording and managing financial transactions for each legal entity?

Choose an answer to begin — your selection is scored in the full session.

Accepted Answer

General ledger. The General ledger is the core module for recording all financial transactions for each legal entity. Option A (Accounts payable) manages vendor invoices and payments. Option B (Accounts receivable) manages customer invoices and receipts. Option D (Budgeting) is for budget planning and control.

Answer

Accounts payable

Answer

Accounts receivable

Answer

Budgeting

Question 2

A company uses Dynamics 365 Finance and has a requirement to automatically generate vendor payments based on due dates and available cash. They want to schedule payments for multiple vendors at once. Which feature should they use?

Accepted Answer

Payment proposal. The Payment proposal feature in Accounts payable allows automatic generation of vendor payments based on criteria such as due dates and available cash. Option A (Check management) is used for managing check payments, not for automatic payment generation. Option B (Manual payment journal) requires manual entry for each payment. Option D (Vendor payment schedule) is a field on purchase orders, not a feature for automatic payment generation.

Answer

Check management

Answer

Manual payment journal

Answer

Vendor payment schedule

Question 3

Your organization needs to track inventory costs using a perpetual inventory system with weighted average costing method. The finance team wants to ensure that inventory transactions are posted to the general ledger automatically. Which parameter must be configured in Dynamics 365 Finance?

Accepted Answer

Post inventory in ledger parameter. The 'Post inventory in ledger' parameter in Dynamics 365 Finance enables automatic posting of inventory transactions to the general ledger when using a perpetual inventory system. Option A (Warehouse management parameters) controls warehouse processes, not general ledger posting. Option B (Inventory model group) defines the costing method and inventory model but does not control automatic posting. Option C (Item model group) is synonymous with inventory model group and thus also not for posting. Only Option D correctly enables the required automatic ledger posting.

Answer

Warehouse management parameters

Answer

Inventory model group

Answer

Item model group

Question 4

A company uses Dynamics 365 Finance to manage its fixed assets. They have purchased a new piece of machinery and want to record it in the system. Which module should they use to create the fixed asset record?

Accepted Answer

Fixed assets. The Fixed assets module is used to manage asset records, depreciation, and disposal. Option A (Budgeting) handles budgets, not fixed assets. Option B (Inventory management) manages stock items, not fixed assets. Option D (General ledger) is for financial transactions and accounts, not asset records.

Answer

Budgeting

Answer

Inventory management

Answer

General ledger

Question 5

Your organization is implementing Dynamics 365 Finance and needs to manage the financial operations of multiple legal entities. Which module is the primary tool for recording and managing financial transactions for each legal entity?

Choose an answer to begin — your selection is scored in the full session.

Accepted Answer

Intercompany accounting. Intercompany accounting setup enables automatic generation and elimination of intercompany transactions, ensuring automatic reconciliation in the general ledger. Option A (Currency revaluation) is used to adjust foreign currency balances, not for intercompany transactions. Option B (Organization hierarchy) defines reporting structures but does not handle intercompany accounting. Option D (Consolidation) combines financial data from multiple entities into a single set of statements, but does not automatically reconcile intercompany transactions.

Answer

Currency revaluation

Answer

Organization hierarchy

Answer

Consolidation

Question 6

A company uses Dynamics 365 Finance and needs to generate financial statements that comply with local regulatory requirements. Which feature should they use?

Accepted Answer

Financial reporting. Financial reporting in Dynamics 365 Finance provides customizable, regulatory-compliant financial statements. Option A (Electronic reporting) is used for configuring electronic documents and tax reports, not specifically for financial statements. Option B (Financial reporting) is the correct feature for generating financial statements. Option C (Intercompany accounting) handles transactions between legal entities, not reporting. Option D (Budget control) manages budget allocations and monitoring, not financial statement generation.

Answer

Electronic reporting

Answer

Intercompany accounting

Answer

Budget control

Question 7

A retail company uses Dynamics 365 Finance and wants to implement Copilot (AI-powered assistant) to help the finance team analyze financial data and generate insights. Which feature in Dynamics 365 Finance provides Copilot capabilities?

Accepted Answer

Copilot in finance and operations. Copilot in finance and operations provides AI-powered analysis and insights. Option A is a general concept, Option B is for reporting, Option D is for analytics, but Copilot is the specific feature.

Answer

Power BI embedded

Answer

Financial reporting

Answer

AI Builder

Question 8

Which TWO of the following are valid modules in Dynamics 365 Finance? (Select two.)

Accepted Answer

Accounts payable. Accounts payable and Budgeting are both core functional modules within Dynamics 365 Finance. Accounts payable handles vendor invoices and payments, while Budgeting enables financial planning and control. Customer relationship management (Option B) is a separate Dynamics 365 application (Sales), not a module within Finance. Project management (Option D) is also a separate application (Project Operations), not part of Finance. Power Apps (Option E) is a low-code platform for building custom apps, not a Finance module.

Answer

Customer relationship management

Answer

Project management

Answer

Power Apps

Question 9

Which THREE actions can be performed in the General ledger module of Dynamics 365 Finance? (Select three.)

Accepted Answer

Perform currency revaluation. Posting journal entries, managing the chart of accounts, and performing currency revaluation are all tasks performed in the General ledger module of Dynamics 365 Finance. Option A (Configure sales tax codes) is a task in the Tax module, and Option C (Process vendor invoices) is a task in the Accounts payable module, so they are not correct.

Answer

Configure sales tax codes

Answer

Process vendor invoices

Question 10

Which TWO of the following are required to set up a consolidation in Dynamics 365 Finance? (Select two.)

Accepted Answer

A consolidation company. A consolidation company serves as the legal entity for the consolidated data. Currency conversion rates are required to translate amounts from source companies to the consolidation company's currency. Reporting trees are optional for structuring drill-down, elimination rules are optional for automating intercompany eliminations, and budget plan templates are unrelated to consolidation setup.

Answer

Reporting tree

Answer

Elimination rules

Answer

Budget plan templates

Question 11

Your organization is implementing Dynamics 365 Finance and needs to manage the financial operations of multiple legal entities. Which module is the primary tool for recording and managing financial transactions for each legal entity?

Choose an answer to begin — your selection is scored in the full session.

Accepted Answer

Electronic reporting (ER). Electronic reporting (ER) is the correct feature as it allows configuring electronic documents for different countries/regions, including electronic invoices. Option B (Payment formats) is used for defining payment formats, not for electronic invoicing compliance. Option C (Financial reporting) is for creating financial statements and reports, not for electronic invoicing. Option D (Data management) is a framework for data import/export and entity management, not specifically for electronic invoicing.

Answer

Payment formats

Answer

Financial reporting

Answer

Data management

Question 12

A company uses Dynamics 365 Finance. The finance team notices that the general ledger balances do not match the subsidiary ledger balances for accounts payable. What should they investigate first?

Accepted Answer

Unposted vendor invoices and payments. The most common cause of a mismatch between the general ledger and the accounts payable subsidiary ledger is unposted vendor invoices or payments that are still in draft or pending posting. Therefore, the finance team should first investigate unposted vendor invoices and payments (Option B). Option A (audit trail of posted transactions) would only show transactions that have already been posted, not those waiting to be posted, so it would not help identify the cause. Option C (process automation framework) is unrelated to ledger reconciliation. Option D (posting profiles for vendors) define how transactions post to the general ledger but do not directly address the mismatch.

Answer

The audit trail of posted transactions

Answer

The process automation framework

Answer

The posting profiles for vendors

Question 13

Your organization needs to automate the process of sending payment remittance advice to vendors after payments are made. Which Dynamics 365 Finance feature should be configured?

Accepted Answer

Vendor payment journal. The vendor payment journal in Dynamics 365 Finance provides the functionality to automatically send payment remittance advice to vendors when payments are processed. This feature allows you to define payment formats and remittance settings that trigger the generation and transmission of remittance advice. Option B is incorrect because the purchase order is used for ordering goods, not for payment remittance. Option C is incorrect because the vendor invoice journal is for recording invoices, not for payments. Option D is incorrect because payment format is a configuration component within the vendor payment journal, not a standalone feature for sending advice.

Answer

Purchase order

Answer

Vendor invoice journal

Answer

Payment format

Question 14

A multinational company uses Dynamics 365 Finance with multiple legal entities. They want to process intercompany transactions automatically. What should they configure?

Accepted Answer

Intercompany accounting. Intercompany accounting is the feature that automates intercompany transactions, making Option D correct. Option A (Elimination rules) is used to remove intercompany balances during consolidation, not for day-to-day transactions. Option B (Consolidations) combines financial statements of multiple entities, not for processing individual transactions. Option C (Transfer orders) are for inventory transfers between locations, not for general intercompany transactions.

Answer

Elimination rules

Answer

Consolidations

Answer

Transfer orders

Question 15

A company needs to track the purchase order commitment against the budget in Dynamics 365 Finance. Which feature should they use?

Accepted Answer

Budget control. Budget control is the feature in Dynamics 365 Finance that tracks commitments (such as purchase orders) and actual expenditures against the budget. Option B is correct. Option A is incorrect because a recurring journal is used for recurring transactions, not for tracking budget commitments. Option C is incorrect because transaction posting definitions define posting rules but are not related to budget tracking. Option D is incorrect because encumbrance accounting is a part of budget control that specifically tracks commitments; however, the general feature that encompasses this tracking is budget control.

Answer

Recurring journal

Answer

Transaction posting definitions

Answer

Encumbrance accounting