MB-920 Describe Dynamics 365 Finance Practice Test 14 — 15 Questions

Question 1

An organization uses Dynamics 365 Finance for project accounting. They need to bill a customer for a fixed-price project based on a milestone schedule. Which billing method should be used?

Accepted Answer

Fixed-price milestone. In Dynamics 365 Finance project accounting, a fixed-price project billed on a milestone schedule uses the fixed-price milestone billing method. This method lets you define milestones and bill the customer a specified amount or percentage upon completion of each milestone, matching the contractual fixed-price arrangement.

Answer

Cost plus

Answer

Progress billing

Answer

Time and material

Question 2

Refer to the exhibit. A finance manager reviews the budget control configuration in Dynamics 365 Finance. The OverBudgetOption is set to 'WarnOnly'. What will happen when a user attempts to post an expense that exceeds the remaining budget?

Accepted Answer

The user will receive a warning but can still post the expense.. The OverBudgetOption 'WarnOnly' allows posting with a warning. 'Block' prevents posting. 'None' disables control. The configuration shows BudgetControlEnabled=true, so control is active.

Answer

The expense will be posted without any warning.

Answer

The expense will be blocked and cannot be posted.

Answer

The budget control will be ignored because OverBudgetOption is set.

Question 3

A company is implementing Dynamics 365 Finance and needs to configure a chart of accounts that supports multiple legal entities with different fiscal year requirements. What should the administrator do to ensure each legal entity can have its own fiscal calendar while sharing the main accounts?

Accepted Answer

Configure shared main accounts and assign a separate fiscal calendar to each legal entity.. In Dynamics 365 Finance, the chart of accounts is shared across legal entities, but each legal entity can have its own fiscal calendar. Configuring shared main accounts and assigning a separate fiscal calendar per legal entity allows multiple legal entities with different fiscal year requirements to use the same chart of accounts while maintaining independent fiscal periods.

Answer

Assign a fiscal calendar to each main account.

Answer

Create a single fiscal calendar and share it across all legal entities.

Answer

Create a separate chart of accounts for each legal entity.

Question 4

A manufacturing company uses Dynamics 365 Finance. The finance team notices that the 'Work in process' (WIP) account balances are not clearing correctly after production orders are completed. The production orders use the 'Standard cost' costing method. What is the most likely cause of this issue?

Accepted Answer

The production order variances have not been calculated and posted.. With standard cost costing, production order costs are posted at standard, and any difference between actual and standard is captured as a variance. If variances are not calculated and posted at the end of the production order, the WIP account is not relieved and the balances remain uncleared.

Answer

The bill of materials (BOM) version is not approved.

Answer

The cost category for the production route is set to 'Indirect cost' instead of 'Direct'.

Answer

The item coverage group is set to 'Period' instead of 'Requirement'.

Question 5

A company uses Dynamics 365 Finance and wants to automate the generation of vendor payments for approved invoices that are due within the next seven days. The payment proposal should include invoices from all vendors. What is the best way to configure this?

Accepted Answer

Create a payment proposal with a 'Due by' date filter set to seven days from today.. Option A is correct because in Dynamics 365 Finance, a vendor payment proposal (for example, via Accounts payable > Payments > Vendor payment proposal) can be filtered by a 'Due by' date, so setting that date to today plus seven days automatically includes all approved invoices due within the next seven days across all vendors. This directly matches the requirement to automate generation for every vendor without manual selection. Option B is wrong because payment schedules define installment timing for individual vendors and do not create a due-date-filtered proposal across all vendors. Option C is wrong because vendor payment retention controls withholding on invoices, not which invoices are selected for payment. Option D is wrong because manually selecting invoices in a payment journal is not automated and would not reliably include all invoices due within seven days.

Answer

Configure a payment schedule for each vendor.

Answer

Set up a vendor payment retention for each invoice.

Answer

Use the 'Payment journal' to manually select invoices.

Question 6

A company is configuring Dynamics 365 Finance for a new subsidiary. The subsidiary uses a different currency than the parent company. What must be set up to enable translation of the subsidiary's financial statements to the parent's reporting currency?

Accepted Answer

Exchange rates. To translate a subsidiary's financial statements from its local currency to the parent company's reporting currency, Dynamics 365 Finance requires exchange rates to be set up. Exchange rates define the conversion factors between currencies and are essential for currency translation, revaluation, and reporting. Without exchange rates, the system cannot perform the necessary conversions.

Answer

Currency revaluation

Answer

Consolidation company

Answer

Intercompany accounting

Question 7

A company is implementing Dynamics 365 Finance and needs to track expenses by department and project. What dimension combination should be used?

Accepted Answer

Department and Project. Financial dimensions in Dynamics 365 Finance are used to tag transactions for reporting and analysis. To track expenses by both department and project, the financial dimension combination must include Department and Project as active dimensions on the account structure. This allows each posting to carry both attributes, enabling reports that slice expenses by department and drill into project-level detail.

Answer

Department and Vendor

Answer

Item and Project

Answer

Location and Cost center

Question 8

Which TWO of the following are valid actions when using the 'Vendor collaboration' workspace in Dynamics 365 Finance?

Accepted Answer

Vendors can respond to purchase order confirmations.. Vendor collaboration in Dynamics 365 Finance allows vendors to respond to purchase order confirmations (option C) and view their invoices (option D). Options A, B, and E are incorrect: vendors cannot approve purchase requisitions, update item prices, or create purchase orders.

Answer

Vendors can approve purchase requisitions.

Answer

Vendors can update item prices.

Answer

Vendors can create purchase orders.

Question 9

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

Accepted Answer

Define financial dimensions.. Option B is correct because the General ledger is where you define and maintain financial dimensions (such as Department, Cost center, and Business unit), which are used to classify and analyze transactions across the chart of accounts. Option D is correct because the General ledger stores the chart of accounts, the structured list of main accounts that organizations use to record financial transactions and prepare financial statements. Options A and E are incorrect because purchase orders and sales invoices are managed in the Procurement and sourcing and Accounts receivable modules, respectively, not in the General ledger. Option C is incorrect because fixed assets are managed in the Fixed assets module, which is separate from the General ledger.

Answer

Manage purchase orders.

Answer

Manage fixed assets.

Answer

Create sales invoices.

Question 10

Refer to the exhibit. The JSON snippet shows a main account configuration in Dynamics 365 Finance. Based on this configuration, which of the following is true about this account?

Accepted Answer

It has a debit balance of 100,000.. The question cannot be validated because the referenced exhibit is missing. If the exhibit is intended to show a main account configuration, it would typically contain fields such as Main account category, Posting type, and Account type — not a posted balance. A main account's balance is derived from posted ledger entries, not from configuration JSON. Without the exhibit, none of the options can be confirmed as correct.

Answer

It defaults to credit posting.

Answer

It belongs to the Bank main account category.

Answer

It is a liability account.

Question 11

Refer to the exhibit. The SQL-like query is used to retrieve data from Dynamics 365 Finance. What does this query return?

Accepted Answer

Main accounts with total debits greater than 10,000, ordered by total descending.. The query uses aggregation (SUM) with a GROUP BY on main account, a HAVING-style filter for totals greater than 10,000, and an ORDER BY total DESC. This returns only main accounts whose aggregated debit totals exceed the threshold, sorted from highest to lowest. It does not return individual journal entries, so it is a summary/aggregate result rather than a transaction listing.

Answer

All general journal entries for a specific main account.

Answer

Main accounts with total amounts less than 10,000, ordered ascending.

Answer

All main accounts with any activity in 2025.

Question 12

A manufacturing company uses Dynamics 365 Finance to manage its financial operations. The finance team needs to automate the reconciliation of bank transactions with general ledger entries. Which feature should they use?

Accepted Answer

Advanced bank reconciliation. Advanced bank reconciliation allows automatic matching of bank statements with ledger transactions. Option A is wrong because budget control manages budgets, not reconciliation. Option B is wrong because intercompany accounting handles transactions between legal entities. Option D is wrong because cash flow forecasting predicts future cash positions.

Answer

Budget control

Answer

Intercompany accounting

Answer

Cash flow forecasting

Question 13

A company uses Dynamics 365 Finance with multiple legal entities. They need to view consolidated financial data across all entities without manual intervention. What should they configure?

Accepted Answer

Consolidation. Consolidation in Dynamics 365 Finance is the feature that aggregates financial data from multiple legal entities into a single consolidated view. It allows organizations to combine account balances, apply elimination rules, and produce consolidated financial statements without manual data entry. Configuring consolidation lets the system pull transactions from subsidiary entities into a consolidation legal entity automatically.

Answer

Currency revaluation

Answer

Financial dimension sets

Answer

Elimination rules

Question 14

During a month-end close, a Dynamics 365 Finance user encounters an error when trying to post a vendor invoice. The invoice has been approved but the system shows 'Invoice posting failed due to account validation'. What is the most likely cause?

Accepted Answer

The account combination used is not valid in the chart of accounts.. The error message 'Invoice posting failed due to account validation' points directly to the ledger account combination being invalid — for example, a missing main account, an inactive dimension, or a combination blocked in the chart of accounts. Dynamics 365 Finance validates the account structure before posting, so an invalid combination halts posting even if the invoice is approved.

Answer

The vendor is on hold in accounts payable.

Answer

The invoice has not been approved by the workflow.

Answer

The general ledger journal for the invoice is not yet posted.

Question 15

A retail company uses Dynamics 365 Finance to manage its fixed assets. They purchase a new delivery truck. Which fixed asset transaction type should they use to record the purchase?

Accepted Answer

Acquisition. In Dynamics 365 Finance Fixed Assets, the Acquisition transaction type is used to record the initial capitalization of a new asset, including its cost basis, acquisition date, and placement into service. When a company purchases a delivery truck, this transaction creates the asset record and posts the corresponding ledger entries to the fixed asset acquisition accounts.

Answer

Impairment

Answer

Disposal

Answer

Depreciation