MB-920 Describe Dynamics 365 Finance Practice Test 13 — 15 Questions

Question 1

A multinational company uses Dynamics 365 Finance and needs to report financial results in both the local currency (EUR) and the reporting currency (USD). The exchange rates fluctuate daily. What is the recommended approach to handle currency translation for financial reporting?

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

Accepted Answer

Define a reporting currency in the ledger setup and use translation methods.. Dynamics 365 Finance allows defining a reporting currency in the ledger setup, which automatically translates amounts using exchange rates and translation methods like current rate or temporal method. Option A is incorrect because manual adjustments are error-prone and inefficient. Option C is incorrect because separate legal entities are not needed; reporting currency is a ledger-level feature. Option D is incorrect because periodic exchange rate adjustments are used for revaluation of open transactions, not for financial reporting translation.

Answer

Create a separate ledger for USD and manually adjust entries.

Answer

Set up two legal entities, one for EUR and one for USD.

Answer

Use the periodic exchange rate adjustment to update currency values.

Question 2

A company needs to ensure that employee expense reports are approved by their manager before being reimbursed. Which Dynamics 365 Finance feature should be configured?

Accepted Answer

Set up an Expense report workflow with an approval step assigned to the employee's manager.. Setting up an Expense report workflow with an approval step assigned to the employee's manager ensures that expense reports are routed to the manager for approval before reimbursement. Option A is incorrect because project workflows are for project-related transactions, not general expense reports. Option B is incorrect because expense policies define validation rules (e.g., receipt requirements) but do not route approvals. Option C is incorrect because the Electronic reporting module is for generating documents and reports, not for approval routing.

Answer

Configure a Project workflow for expense reports.

Answer

Define expense policies that require manager sign-off.

Answer

Use the Electronic reporting module to generate approval forms.

Question 3

A company uses Dynamics 365 Finance and needs to track the financial performance of individual projects. Costs for materials, labor, and overhead must be recorded against each project. Which module should be used to manage this?

Accepted Answer

Project management and accounting. The Project management and accounting module is specifically designed to track project costs and revenues, including materials, labor, and overhead. Option A is wrong because Procurement and sourcing handles purchasing and vendor management. Option B is wrong because Production control is for manufacturing operations. Option D is wrong because Fixed assets manages asset depreciation and lifecycle.

Answer

Procurement and sourcing

Answer

Production control

Answer

Fixed assets

Question 4

Which TWO actions should a Dynamics 365 Finance administrator take to ensure that intercompany transactions are automatically reconciled and eliminated during consolidation?

Accepted Answer

Set up an elimination rule for intercompany transactions.. Options A and C are correct. Setting up intercompany accounting (option C) ensures that transactions are automatically matched between legal entities, and an elimination rule (option A) automates the elimination of intercompany balances during consolidation. Option B is wrong because the consolidation online feature is for transferring balances, not for elimination. Option D is wrong because consolidation groups are for grouping legal entities, not for eliminating intercompany transactions. Option E is wrong because intercompany workflows are for approval, not for reconciliation or elimination.

Answer

Use the Consolidation online feature to transfer balances.

Answer

Define consolidation groups to group legal entities.

Answer

Create an intercompany workflow to approve transactions.

Question 5

Which THREE features are available in Dynamics 365 Finance to support compliance with International Financial Reporting Standards (IFRS)?

Accepted Answer

Revenue recognition schedules for deferred revenue. Options A, B, and C are correct. Dynamics 365 Finance supports revenue recognition schedules (A) for deferred revenue under IFRS 15, multi-currency accounting with exchange rate adjustments (B) for IAS 21, and depreciation profiles (C) for IAS 16. Option D (vendor collaboration portal) is a procurement feature unrelated to IFRS compliance. Option E (budget control) is for internal management, not external financial reporting standards.

Answer

Vendor collaboration portal

Answer

Budget control for expenditure limits

Question 6

Which TWO are valid methods for posting vendor invoices in Dynamics 365 Finance?

Accepted Answer

Purchase order-based invoice. Options C and D are correct. A purchase order-based invoice is created when a vendor invoice is associated with an existing purchase order. Vendor invoice entry allows direct manual entry of vendor invoices without a purchase order. Option A is incorrect because general journal entries are used for accounting adjustments, not for vendor invoices. Option B is incorrect because sales order invoices are used for customer transactions, not vendor invoices. Option E is incorrect because free text invoices are used for billing customers, not vendors.

Answer

General journal entry

Answer

Sales order invoice

Answer

Free text invoice

Question 7

Refer to the exhibit. A financial analyst needs to post an expense to the Research & Development cost center. They attempt to use the value 'R&D001' but the system does not accept it. The dimension value shown in the exhibit is the only valid value for R&D. What is the most likely reason the entry fails?

Accepted Answer

The dimension value must match 'CC001' exactly.. The dimension value 'CC001' must be used exactly as defined. Option A is wrong because the description is not used for posting. Option B is wrong because the dimension name ('CostCenter') is not included in the value; only the value itself is entered. Option D is wrong because cost centers are a type of financial dimension.

Answer

The dimension description must be entered instead of the value.

Answer

The dimension name must be included in the value.

Answer

Cost centers are not financial dimensions; they are separate.

Question 8

Refer to the exhibit. The period close checklist shows that adjusting entries are pending and depreciation has not started. The accountant wants to run the consolidation process now. What will happen if they attempt to consolidate before completing the other steps?

Accepted Answer

Consolidation can proceed but may produce inaccurate results because adjusting entries and depreciation are missing.. In Dynamics 365 Finance, the period close checklist does not enforce a strict dependency for consolidation. The system will allow the consolidation process to run even if some steps (like adjusting entries and depreciation) are incomplete. However, because these steps affect the financial data, the consolidated results may be inaccurate or incomplete. Option A is incorrect because the system does not block consolidation; it is advisory. Option B is incorrect because consolidation may still run, but the results will be affected by missing depreciation. Option C is incorrect because the system does not automatically post pending steps; those must be completed manually.

Answer

The system will block the consolidation until all steps are completed.

Answer

The consolidation process will fail due to missing depreciation.

Answer

The system will automatically post the pending steps before consolidation.

Question 9

A company uses Dynamics 365 Finance and wants to enable AI-driven insights to detect anomalies in financial transactions. Which Copilot feature should be used?

Accepted Answer

Enable the AI anomaly detection in the Finance insights module.. The AI anomaly detection feature in the Finance insights module uses machine learning to identify unusual financial transactions. Option A is incorrect because 'Activate Copilot for Finance insights to generate reports' focuses on report generation, not anomaly detection. Option B is irrelevant as Copilot for Sales is designed for sales processes, not financial anomaly detection. Option D is also incorrect as Copilot for Service is for customer service scenarios, not financial transactions.

Answer

Activate Copilot for Finance insights to generate reports.

Answer

Use Copilot for Sales to analyze transaction data.

Answer

Configure Copilot for Service to review financial transactions.

Question 10

A company uses Dynamics 365 Finance. The finance team needs to automate periodic tasks such as creating ledger settlements and running month-end closing processes. Which feature should they use?

Accepted Answer

Batch job processing. Batch job processing in Dynamics 365 Finance allows scheduling and automation of periodic tasks like ledger settlements and month-end closing. This feature enables the finance team to set up recurring processes that run without manual intervention. Option B (Bank reconciliation) is for reconciling bank transactions, not for automating ledger settlements. Option C (Vendor invoice pool) is for managing vendor invoices, not for periodic automation. Option D (Financial reporting) is for generating reports, not for scheduling tasks.

Answer

Bank reconciliation

Answer

Vendor invoice pool

Answer

Financial reporting

Question 11

A manufacturing company uses Dynamics 365 Finance. They want to ensure that raw materials are automatically reserved when a production order is created and that the cost of the raw materials is included in the production order cost. Which costing method supports this requirement?

Accepted Answer

Standard costing. Standard costing uses predefined standard costs, allowing automatic reservation of materials at standard cost and inclusion of those costs in the production order. Option A (Weighted average) calculates cost based on average inventory cost, not standard cost, and does not support automatic reservation. Option C (LIFO) and D (FIFO) are inventory valuation methods based on physical flow and actual costs, not standard costs, and do not enable automatic reservation at standard cost.

Answer

Weighted average

Answer

LIFO

Answer

FIFO

Question 12

A company is implementing Dynamics 365 Finance. They need to support multiple languages and currencies for international subsidiaries. Which module should they configure?

Accepted Answer

System administration. System administration contains settings for languages, currencies, and localization features that apply across the entire organization. Option A is incorrect because Accounts payable focuses on vendor transactions, not system-wide configurations. Option C is incorrect because Organization administration manages legal entities and organizational structures, but the multilingual and multi-currency settings are configured in System administration. Option D is incorrect because General ledger deals with the chart of accounts and financial dimensions, not language and currency settings.

Answer

Accounts payable

Answer

Organization administration

Answer

General ledger

Question 13

A retail company uses Dynamics 365 Finance. They want to automatically post revenue and cost of goods sold (COGS) when a sales order is invoiced. Which posting setup is required?

Accepted Answer

Inventory posting. Inventory posting is used to define accounts for revenue, COGS, and inventory when items are sold. Option A is incorrect because Procurement and sourcing posting handles purchase-related transactions, not sales. Option B is incorrect because Accounts receivable posting manages customer balances and payments, not revenue/COGS. Option D is incorrect because General ledger posting defines main accounts but does not specify the posting setup for sales orders; that is done in Inventory posting.

Answer

Procurement and sourcing posting

Answer

Accounts receivable posting

Answer

General ledger posting

Question 14

A company uses Dynamics 365 Finance with budget control enabled. They notice that budget funds are not being consumed when a purchase requisition is approved. The budget check is configured to occur on journal approval. What is the most likely cause?

Accepted Answer

The budget check is not configured for purchase requisitions. Budget control must be set to check at the purchase requisition stage. Since budget check is configured for journal approval, it does not occur when the requisition is approved, so funds are not consumed. Option A is wrong because budget thresholds affect warnings, not consumption timing. Option B is wrong because document level determines when the check occurs, but the question specifies it is set to purchase order, which is later than requisition. Option C is wrong because the budget source being incorrect would cause other issues, not the lack of consumption at requisition approval.

Answer

Budget thresholds are set too high

Answer

The document level is set to purchase order

Answer

The budget source is incorrect

Question 15

A company uses Dynamics 365 Finance. The accountant needs to view the current balance of a specific ledger account at any time. Which inquiry should they use?

Accepted Answer

Trial balance. Trial balance shows the balance of each ledger account for a specified period, allowing the accountant to view the current balance. Option B is incorrect because Ledger settlement is used for matching debits and credits, not for viewing balances. Option C is incorrect because Chart of accounts is a list of accounts, not balances. Option D is incorrect because Financial reporting generates reports but not real-time balance for a single account.

Answer

Ledger settlement

Answer

Chart of accounts

Answer

Financial reporting