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

Question 1

Refer to the exhibit. A company has configured the above allocation rule in Dynamics 365 Finance. What does this rule do?

Accepted Answer

Allocates overhead from account 601100 to 601200 based on cost center. The allocation rule transfers balances from main account 601100 to main account 601200, using the cost center dimension as the basis for allocation. Option B correctly describes this. Option A is incorrect because although it identifies the correct source and destination accounts, it states 'based on main account' rather than 'based on cost center.' Option C is wrong because it reverses the source and destination accounts. Option D is incorrect because the rule uses a dimension basis (cost center) rather than a fixed percentage.

Answer

Allocates overhead from account 601100 to 601200 based on main account

Answer

Allocates overhead from account 601200 to 601100 based on cost center

Answer

Allocates a fixed percentage of overhead to all departments

Question 2

Refer to the exhibit. A Dynamics 365 Finance administrator imports the above exchange rate. For what purpose would an 'Average' exchange rate type be used?

Accepted Answer

To revalue balance sheet accounts at period end. Correct: Average rates are used for revaluation of balance sheet accounts. Option A is wrong because budget conversions use budget rates. Option B is wrong because transaction entry uses spot rates. Option D is wrong because sales invoicing uses spot rates.

Answer

To convert budget amounts

Answer

To convert foreign currency transactions at the time of entry

Answer

To calculate sales invoice amounts in company currency

Question 3

Refer to the exhibit. A data entity export shows the above record for a vendor transaction. Which Dynamics 365 Finance module is this data most likely from?

Accepted Answer

Accounts payable. Correct: The VendTrans table is from Accounts payable, making D the correct answer. Option A is wrong because Fixed assets uses AssetTrans. Option B is wrong because General ledger uses LedgerTrans. Option C is wrong because Sales tax uses TaxTrans.

Answer

Fixed assets

Answer

General ledger

Answer

Sales tax

Question 4

A retail company wants to automate the reconciliation of bank statements with ledger entries in Dynamics 365 Finance. Which feature should they use?

Accepted Answer

Advanced bank reconciliation. Advanced bank reconciliation allows automatic matching of bank statement lines with bank transactions in the system. Option A is wrong because cash flow forecasting predicts future cash flows, not reconciliation. Option C is wrong because the payment journal is used to record payments, not reconciliation. Option D is wrong because the general journal is used for manual journal entries, not reconciliation.

Answer

Cash flow forecasting

Answer

Payment journal

Answer

General journal

Question 5

A multinational corporation uses Dynamics 365 Finance with multiple legal entities. The consolidation team needs to eliminate intercompany transactions automatically during the consolidation process. What is the best approach?

Accepted Answer

Define intercompany elimination rules in the consolidation process. Intercompany elimination rules in Dynamics 365 Finance allow automatic elimination of intercompany transactions during the consolidation process. Option B is wrong because consolidation companies aggregate data but do not eliminate intercompany transactions automatically. Option C is wrong because manual identification and removal is error-prone and not automatic. Option D is wrong because intercompany accounting posts transactions to both legal entities but does not eliminate them during consolidation.

Answer

Use consolidation companies to aggregate data without elimination

Answer

Manually identify and remove intercompany transactions before consolidation

Answer

Set up intercompany accounting to automatically post to both legal entities

Question 6

A service company uses Dynamics 365 Finance to manage fixed assets. They recently acquired a building and want to split the cost between land (non-depreciable) and building (depreciable). How should they set this up?

Accepted Answer

Create two fixed asset records: one for land with non-depreciable profile, and one for building with depreciable profile. To properly account for the building acquisition, two separate fixed asset records should be created: one for the land with a non-depreciable profile, and one for the building with a depreciable profile. This allows the system to handle the different depreciation treatments correctly. Option A is incorrect because a single record cannot have a non-depreciable portion; manual adjustment would be error-prone. Option C is incorrect because there is no 'Component Depreciation' feature for splitting cost in this way. Option D is incorrect because sub-assets are typically used for components that are also depreciable, not for non-depreciable land.

Answer

Create one fixed asset record for the total cost and manually adjust depreciation

Answer

Use the 'Component Depreciation' feature to split the asset

Answer

Create a parent asset for the building and a sub-asset for the land

Question 7

A company wants to use Dynamics 365 Finance to track budget versus actuals for each department. What should they configure?

Accepted Answer

Budget control configuration. Budget control in Dynamics 365 Finance allows tracking budget versus actual expenses at the department level. Option A is wrong because financial dimensions allow segmentation of transactions but do not track budget versus actuals by themselves. Option B is wrong because the chart of accounts structures the general ledger accounts, not budget tracking. Option D is wrong because the general journal is used to record journal entries, not to track budget versus actuals.

Answer

Financial dimensions

Answer

Chart of accounts

Answer

General journal

Question 8

An organization is implementing Dynamics 365 Finance and needs to ensure that all vendor invoices are approved before payment. They want to automate three-way matching for purchase order invoices. What must be set up?

Accepted Answer

Accounts payable parameters, invoice matching workflow, and vendor tolerances. Three-way matching in Dynamics 365 Finance requires all three components: accounts payable parameters (to enable matching), the invoice matching workflow (to define the approval process), and vendor tolerances (to set acceptable variances). Option A is wrong because only the workflow is insufficient without enabling matching in parameters and setting tolerances. Option B is wrong because only accounts payable parameters are insufficient without the workflow and tolerances. Option D is wrong because only vendor tolerances are insufficient without the parameters and workflow.

Answer

Only the invoice matching workflow

Answer

Only accounts payable parameters for invoice matching

Answer

Only vendor tolerances for matching

Question 9

A company using Dynamics 365 Finance needs to generate financial statements in a specific format required by local regulators. Which tool should they use?

Accepted Answer

Financial reporting (Management Reporter). Financial reporting (Management Reporter) allows creating custom financial statements in various formats. Option B is wrong because Power BI is for data visualization, not formal financial statements. Option C is wrong because the general ledger inquiry shows account balances but not formatted statements. Option D is wrong because Excel integration can help but is not the native tool for regulatory reporting.

Answer

Power BI dashboards

Answer

General ledger inquiry

Answer

Excel export and manual formatting

Question 10

A company wants to use Dynamics 365 Finance to manage its cash flow by forecasting future bank balances. Which module should they use?

Accepted Answer

Cash and bank management. Cash and bank management includes cash flow forecasting tools. Option B (Accounts receivable) manages customer payments, not forecasting. Option C (Accounts payable) manages vendor payments, not forecasting. Option D (General ledger) is for posting, not forecasting.

Answer

Accounts receivable

Answer

Accounts payable

Answer

General ledger

Question 11

A company using Dynamics 365 Finance notices that some purchase orders are being created with incorrect tax codes. The tax codes are determined by the vendor and item. What should they configure to enforce correct tax codes?

Accepted Answer

Assign appropriate Sales tax groups and Item sales tax groups. The combination of Sales tax group (assigned to customer/vendor) and Item sales tax group (assigned to item) determines the tax code applied to a purchase order. By configuring these groups appropriately, Dynamics 365 Finance automatically selects the correct tax code. Option B is incorrect because tax authorities and reporting codes manage tax reporting, not tax code assignment. Option C is incorrect because tax codes are assigned to groups (Sales tax group and Item sales tax group), not directly to each vendor/item. Option D is incorrect because tax exemption numbers apply to customers, not to enforcing correct tax codes on purchase orders.

Answer

Set up tax authorities and reporting codes

Answer

Define tax codes for each vendor and each item

Answer

Configure tax exemption numbers for vendors

Question 12

A company is implementing Dynamics 365 Finance and needs to configure the chart of accounts. Which TWO statements are true about the chart of accounts?

Accepted Answer

The chart of accounts can be shared across multiple legal entities.. Options A and E are correct. The chart of accounts can be shared across multiple legal entities (A) and it defines the list of main accounts used in the general ledger (E). Option B is incorrect because account structures, not the chart of accounts itself, define valid dimension combinations. Option C is incorrect because main accounts with posted transactions cannot be deleted. Option D is incorrect because the chart of accounts does not have to be unique per legal entity; it can be shared.

Answer

The chart of accounts includes account structures that define valid dimension combinations.

Answer

Main accounts can be deleted even if they have posted transactions.

Answer

The chart of accounts must be unique for each legal entity.

Question 13

A company uses Dynamics 365 Finance for intercompany transactions. Which THREE components are required to enable intercompany accounting?

Accepted Answer

Intercompany agreements. Options A, C, and D are correct. Intercompany accounting requires defining intercompany relationships, setting up intercompany parameters, and creating intercompany agreements. Option B is wrong because intercompany journals are a result, not a prerequisite. Option E is wrong because consolidation is a separate process.

Answer

Intercompany journals for posting

Answer

Consolidation setup

Question 14

Which TWO features are part of Dynamics 365 Finance for managing accounts payable?

Accepted Answer

Vendor invoice automation. Vendor invoice automation and payment proposals are key accounts payable features. Billing schedules and collection letters are for accounts receivable. Fixed asset depreciation is for fixed assets.

Answer

Billing schedules

Answer

Fixed asset depreciation

Answer

Collection letters

Question 15

You are the finance system administrator for Contoso Ltd., a global manufacturing company with legal entities in the United States, Germany, and Japan. Each entity uses Dynamics 365 Finance and has its own chart of accounts due to local reporting requirements. The CFO wants to consolidate the financial results of all entities into a single consolidated report at the end of each month. Currently, the consolidation is done manually by exporting data to Excel, which is error-prone and time-consuming. The CFO wants to use the consolidation functionality within Dynamics 365 Finance. Additionally, intercompany transactions between entities are significant, and the CFO wants to automate the elimination of these transactions during consolidation. You need to design a solution that meets the following requirements:
- Use the Dynamics 365 Finance consolidation module.
- Automate the elimination of intercompany transactions.
- Allow each entity to maintain its own chart of accounts.
- Generate consolidated financial statements in the US GAAP format.

What should you do?

Accepted Answer

Create a separate consolidation legal entity, set up consolidation groups and accounts to map the different charts, and configure intercompany elimination rules.. To consolidate with different charts of accounts, you must create a consolidation company that uses a chart of accounts for US GAAP, and set up consolidation groups and accounts to map the source accounts. Intercompany elimination rules can be defined to automate eliminations. Option A is wrong because it suggests changing all entities to use the same chart, which contradicts the requirement. Option C is wrong because setting up child companies does not solve the chart of accounts mapping or intercompany elimination. Option D is wrong because Power BI is not the consolidation module and cannot automate eliminations.

Answer

Define the same chart of accounts in all legal entities and then use the consolidation online functionality to consolidate.

Answer

Set up the German and Japanese entities as child companies under the US entity, and then run consolidation.

Answer

Use Power BI to connect to each legal entity's data and create consolidated reports with calculated columns to eliminate intercompany transactions.