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

Question 1

A company using Dynamics 365 Finance is experiencing performance issues when running month-end close processes. The finance team suspects that the issue is related to the number of open transactions. Which strategy should be used to improve performance?

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

Accepted Answer

Archive historical transactions and reduce the data volume.. Archiving historical transactions reduces the volume of data that month-end close routines must scan, which directly addresses the performance bottleneck caused by a large open-transaction table. This is the standard remediation for slow close processes in Dynamics 365 Finance.

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Increase the number of concurrent users during close.

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Modify the financial reporting to use summary data.

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Run all close processes in batch mode.

Question 2

Which TWO features in Dynamics 365 Finance help organizations comply with regulatory requirements for financial reporting? (Choose two.)

Accepted Answer

Audit trails and change logs.. Option D (Audit trails and change logs) is correct because Dynamics 365 Finance maintains detailed audit trails and change logs that record who created, modified, or deleted financial transactions and master data, providing the traceability and evidence regulators require for financial reporting compliance. Option E (Financial reporting (Management Reporter)) is correct because it generates standardized financial statements such as balance sheets, income statements, and cash flow reports from ledger data, enabling organizations to produce consistent, regulation-aligned reports. Option A (Vendor invoice automation) is incorrect because it streamlines accounts payable invoice processing and approvals, which improves operational efficiency but does not itself address regulatory reporting requirements. Option B (Payment schedules) is incorrect because it controls the timing and installment structure of vendor or customer payments, an operational cash management feature rather than a compliance reporting capability. Option C (Budget control) is incorrect because it enforces spending limits against budgeted amounts to prevent overspending, which supports internal financial discipline but is not a regulatory financial reporting feature.

Answer

Vendor invoice automation.

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Payment schedules.

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Budget control.

Question 3

A company implements Dynamics 365 Finance and needs to configure a chart of accounts that supports multiple legal entities. What is the best practice for managing shared accounts?

Accepted Answer

Use the shared chart of accounts feature and assign it to each legal entity.. The shared chart of accounts feature in Dynamics 365 Finance allows a single chart of accounts to be used across multiple legal entities, ensuring consistency and simplifying maintenance. Option A is incorrect because deleting unused accounts is irrelevant to sharing. Option C is incorrect because financial dimensions are used for tracking, not for sharing the chart of accounts. Option D is incorrect because separate charts per entity increase complexity and are not a best practice.

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Delete accounts that are not used across all entities.

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Use financial dimensions to differentiate accounts by legal entity.

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Create a separate chart of accounts for each legal entity to ensure independence.

Question 4

A company uses Dynamics 365 Finance and needs to enforce that purchase orders over $10,000 require approval from the finance manager. What is the most efficient way to configure this?

Accepted Answer

Create a purchase order approval workflow with a condition on amount.. Creating a purchase order approval workflow with a condition on amount is the most efficient way to enforce that POs over $10,000 require finance manager approval. Workflow automates the approval process, ensuring that only POs meeting the condition are routed for approval, and it provides a consistent, auditable process.

Answer

Configure budget control to restrict spending.

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Manually notify the finance manager for high-value POs.

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Set up a vendor invoice policy.

Question 5

An organization using Dynamics 365 Finance needs to streamline vendor payments by grouping multiple invoices into a single payment. Which feature should they use?

Accepted Answer

Payment proposal. The Payment proposal feature in Dynamics 365 Finance is used to select and group multiple vendor invoices into a single payment based on criteria such as due date, vendor, or payment method. It generates a proposal that can be reviewed, modified, and then used to create payments, thereby streamlining the payment process by consolidating invoices. This directly addresses the requirement to group multiple invoices into a single payment.

Answer

Electronic payment format

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Payment schedule

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Positive pay

Question 6

A retail company using Dynamics 365 Finance notices that inventory valuations are incorrect due to varying purchase prices. Which costing method will provide the most accurate valuation by averaging costs over a period?

Accepted Answer

Weighted average. Weighted average costing in Dynamics 365 Finance calculates inventory value by averaging the cost of all units purchased over a period, which smooths out price fluctuations and provides a more accurate valuation when purchase prices vary. This matches the requirement to average costs over a period.

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Standard cost

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FIFO

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Moving average

Question 7

A multinational corporation uses Dynamics 365 Finance and needs to report in both local GAAP and IFRS. What is the recommended approach?

Accepted Answer

Use multiple ledgers with different accounting frameworks.. Dynamics 365 Finance supports multiple ledgers within a single legal entity, each attached to a different accounting framework (chart of accounts, fiscal calendar, and currency). This lets the organization post transactions once and generate both local GAAP and IFRS reports from the same source data, which is the recommended multi-GAAP approach.

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Set up two separate instances of Dynamics 365 Finance.

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Use the consolidation module to convert IFRS to local GAAP.

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Configure financial dimensions to differentiate GAAPs.

Question 8

An organization using Dynamics 365 Finance implements AI-driven cash flow forecasting. What data source does the feature primarily use?

Accepted Answer

Historical transaction data. Dynamics 365 Finance's AI-driven cash flow forecasting primarily uses historical transaction data — past customer payments, vendor invoices, and cash movements — to train models that predict future cash positions. This historical data provides the patterns and seasonality the AI needs to generate forecasts. External balances and budgets can supplement, but the core input is historical transactions.

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External bank account balances

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Vendor payment history

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Budget and forecast data

Question 9

Which TWO features in Dynamics 365 Finance help ensure compliance with regulatory reporting requirements?

Accepted Answer

Electronic reporting (ER) tool. Electronic reporting (ER) tool (B) is correct because it provides a configurable, no-code framework for designing and generating regulatory documents and statutory reports in required formats (for example, XML, JSON, or Excel) that can be mapped to specific country/region schemas and submitted to tax or government authorities. Tax reporting (D) is correct because Dynamics 365 Finance includes dedicated tax reporting capabilities, such as sales tax/GST/VAT reporting, withholding tax reporting, and tax declaration generation, which directly support statutory and regulatory filing obligations. Budget control (A) is not the intended answer because it governs spending limits and budget checks, not external regulatory reporting. Fixed asset management (C) handles asset acquisition, depreciation, and disposal accounting, but it is not itself a regulatory reporting compliance feature. Vendor collaboration (E) supports supplier interactions and procurement processes, not regulatory report generation or submission.

Answer

Budget control

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Fixed asset management

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Vendor collaboration

Question 10

Refer to the exhibit. A Dynamics 365 Finance administrator is configuring a financial dimension set. What is the primary purpose of this configuration?

Accepted Answer

To enable reporting and analysis by the selected dimensions. A financial dimension set in Dynamics 365 Finance is a predefined list of financial dimensions that can be used together for reporting and analysis. Its primary purpose is to enable reporting and analysis by the selected dimensions, allowing users to filter and group financial data based on combinations of dimensions. This configuration does not define the main account structure, validate combinations, or restrict user access; those are handled by other features.

Answer

To define the main account and dimension structure

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To validate financial dimension combinations

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To restrict user access to specific financial data

Question 11

A company uses Dynamics 365 Finance to manage its accounts payable. The AP clerk receives an invoice that does not have a purchase order. Which document type should the clerk use to record the invoice?

Accepted Answer

Vendor invoice journal. A vendor invoice journal is the correct document type for recording an invoice that has no associated purchase order. In Dynamics 365 Finance, invoices not tied to a PO are entered through the Vendor invoice journal (Accounts payable > Invoices > Vendor invoice journal), where the clerk manually enters the vendor, invoice number, and expense/ledger distributions. This creates the voucher and posts directly to the general ledger without requiring a PO match.

Answer

Purchase order invoice

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Vendor invoice workspace

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Invoice pool

Question 12

An organization uses Dynamics 365 Finance to manage its cash and bank accounts. The treasurer needs to reconcile a bank statement with the system's bank transactions. Which module should the treasurer use?

Accepted Answer

Cash and bank management. Cash and bank management handles bank reconciliation. Accounts payable and Accounts receivable are for vendor and customer transactions. General ledger is for the chart of accounts.

Answer

Accounts payable

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General ledger

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Accounts receivable

Question 13

A company uses Dynamics 365 Finance and wants to automate the calculation and posting of daily interest on overdue customer invoices. Which feature should be configured?

Accepted Answer

Interest codes. Interest codes in Dynamics 365 Finance are specifically designed to automate the calculation and posting of interest on overdue customer invoices. They allow you to define interest rates, calculation methods (e.g., simple or compound), and posting intervals (daily, monthly, etc.). When configured with a daily interval, the system automatically calculates and posts interest on overdue balances, meeting the requirement.

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Payment schedules

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Collection letters

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Customer posting profiles

Question 14

A company uses Dynamics 365 Finance to manage its budget. The finance team wants to prevent users from posting expenses that exceed the available budget. Which budget control configuration is required?

Accepted Answer

Budget control configuration. Budget control configuration enables checking against budget. Budget plans are for planning. Budget register entries are for recording. Budget model is a structure.

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Budget plan

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Budget model

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Budget register entry

Question 15

A retail company uses Dynamics 365 Finance. They want to automatically allocate overhead costs from a cost center to multiple departments based on a predefined percentage. Which costing feature should they use?

Accepted Answer

Cost allocations. Cost allocations in Dynamics 365 Finance are used to distribute costs from a source cost center or cost object to one or more destination cost objects using a defined allocation basis, such as a fixed percentage, quantity, or amount. This is exactly the mechanism for spreading overhead from a single cost center to multiple departments per a predefined percentage.

Answer

Cost accounting

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Overhead calculation

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Cost rollup