MB-920 Describe Dynamics 365 Finance Practice Test 16 — 15 Questions

Question 1

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 in Dynamics 365 Finance checks whether sufficient budget funds are available before a purchase order (or other source document) is confirmed, and it can block or warn on posting if the budget would be exceeded. This directly addresses tracking purchase order commitments against budget.

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Recurring journal

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Transaction posting definitions

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Encumbrance accounting

Question 2

Your Dynamics 365 Finance environment experiences slow performance when running the period closing process. Which approach should you recommend to improve performance?

Accepted Answer

Run period closing tasks as batch jobs with multiple threads. Period closing in Dynamics 365 Finance involves many long-running tasks such as foreign currency revaluation, inventory close, and ledger settlement. Running these as batch jobs with multiple threads (parallel processing) distributes the workload across batch servers and threads, significantly reducing elapsed time. This is the recommended approach for improving period closing performance.

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Increase the maximum batch group size

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Archive historical data

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Use data sharing to distribute closing tasks across legal entities

Question 3

A company wants to use AI to predict customer payment times in Dynamics 365 Finance. Which feature should they enable?

Accepted Answer

Customer payment predictions. Dynamics 365 Finance includes a Customer payment predictions feature that uses machine learning to predict when customers will pay their invoices, based on historical payment behavior. Enabling this feature allows the system to generate predictions that help prioritize collections and improve cash flow forecasting. This is the specific AI capability designed for predicting customer payment times.

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Cash flow forecasting

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Financial reporting

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Invoice capture

Question 4

A company is implementing Dynamics 365 Finance and needs to comply with the Sarbanes-Oxley (SOX) act. Which feature should they use to enforce separation of duties?

Accepted Answer

Security roles and duties. To comply with the Sarbanes-Oxley (SOX) act, segregation of duties is enforced through security roles and duties in Dynamics 365 Finance. Option D is correct. Option A (Electronic reporting) is used for generating and processing electronic documents, not for separation of duties. Option B (Audit trail) tracks changes made to the system but does not enforce separation of duties. Option C (Batch job) is used for automated background processing, unrelated to security.

Answer

Electronic reporting

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Audit trail

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Batch job

Question 5

Which TWO features in Dynamics 365 Finance help organizations comply with international accounting standards such as IFRS? (Select TWO.)

Accepted Answer

Multiple posting layers. Multiple posting layers (A) is correct because Dynamics 365 Finance lets you post the same transaction to separate layers such as Current, Operations, and Tax, so you can maintain an IFRS-basis ledger alongside a local statutory ledger without duplicating data entry. Dual currency support (D) is correct because it allows accounting and reporting currencies to be tracked independently, including the ability to store historical exchange rates and remeasure amounts, which is essential for translating foreign-currency transactions and financial statements under IAS 21. Vendor payment proposal (B) is incorrect because it is an accounts payable processing tool for selecting and generating payments, not an accounting-standards compliance feature. Budget control (C) is incorrect because it enforces spending limits against budget registers and does not address international reporting frameworks. Fixed asset management (E) is incorrect because, while it handles depreciation and asset accounting, it is a subledger function rather than a mechanism specifically designed for IFRS compliance.

Answer

Vendor payment proposal

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Budget control

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Fixed asset management

Question 6

Which THREE components are typically part of the general ledger setup in Dynamics 365 Finance? (Select THREE.)

Accepted Answer

Chart of accounts. The general ledger setup in Dynamics 365 Finance is built around the chart of accounts (A), which defines the structure and organization of all ledger accounts used by the legal entity. Main accounts (B) are the individual accounts within that chart of accounts where transactions are posted and balances are tracked. Financial dimensions (E) are also core to the general ledger setup because they provide the additional segmentation (such as department, cost center, or purpose) used to classify and analyze ledger postings. Payment schedules (C) belong to Accounts payable/payment configuration rather than the general ledger setup, and the customer payment journal (D) is an Accounts receivable journal used for processing customer payments, not a general ledger setup component.

Answer

Payment schedule

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Customer payment journal

Question 7

Which TWO are valid options for posting vendor invoices in Dynamics 365 Finance? (Select TWO.)

Accepted Answer

Vendor invoice journal. Option A, Vendor invoice journal, is correct because it is the standard posting method for recording vendor invoices that are not tied to a purchase order, allowing you to enter invoice header and line details directly in the Invoice journal form and post them to the vendor ledger. Option B, Purchase order invoice posting, is correct because it is the primary method for posting vendor invoices that are matched to a purchase order, using the Invoice registration and Invoice approval workflow to perform two-way or three-way matching before posting. Option C, Sales order invoice, is incorrect because it posts invoices to customers (accounts receivable), not vendor invoices. Option D, Vendor payment journal, is incorrect because it is used to settle and pay existing vendor transactions, not to post new vendor invoices. Option E, Production order, is incorrect because it is a manufacturing document used to report and post production activity, not vendor invoice posting.

Answer

Sales order invoice

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Vendor payment journal

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Production order

Question 8

You are reviewing a journal entry in Dynamics 365 Finance. The exhibit shows the accounting distribution for a transaction. What type of account is 110120 likely to be?

Accepted Answer

Asset account. In Dynamics 365 Finance, the account number 110120 follows the typical main account numbering convention where accounts starting with 1 represent assets. Specifically, 110120 is a sub-account under the 110000 range, which is commonly used for cash, bank, or other current asset accounts. Therefore, it is an asset account.

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Revenue account

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Liability account

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Expense account

Question 9

A manufacturing company uses Dynamics 365 Finance to manage its financial operations. The company recently acquired a subsidiary and needs to consolidate financial statements. The subsidiary uses a different fiscal calendar and chart of accounts. What is the recommended approach to consolidate financial data?

Accepted Answer

Use the Consolidate with elimination feature in Dynamics 365 Finance, mapping the subsidiary's accounts to the parent company's chart of accounts.. Dynamics 365 Finance provides a built-in Consolidate with elimination feature that supports consolidating multiple legal entities with different charts of accounts and fiscal calendars. You map the subsidiary's accounts to the parent's chart of accounts and define exchange rates and elimination rules. This is the recommended, supported approach for financial consolidation.

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Recreate the subsidiary's chart of accounts to match the parent company before consolidation.

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Use the General ledger export process to transfer trial balance data and then manually consolidate.

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Export data from the subsidiary's system and import it into the parent company's Dynamics 365 Finance using data integration.

Question 10

A company implements Dynamics 365 Finance and needs to ensure that vendor invoices are automatically matched to purchase orders and product receipts before payment. Which configuration should be used?

Accepted Answer

Enable invoice matching validation in Accounts payable parameters.. The correct option is C: Enable invoice matching validation in Accounts payable parameters. This setting activates two-way or three-way matching so that vendor invoices are validated against the corresponding purchase order and product receipt before they can be posted or paid, which is exactly the requirement described. Option A is incorrect because payment schedules only control the timing and installments of payments, not invoice-to-PO/receipt matching. Option B is incorrect because an approval workflow routes invoices for human approval but does not itself perform PO/product receipt matching. Option D is incorrect because budget control checks available budget funds, not the matching of invoices to purchase orders and receipts.

Answer

Define payment schedules for each vendor.

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Configure vendor invoice workflow for approval.

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Set up budget control to validate invoice amounts against available budget.

Question 11

A retail company uses Dynamics 365 Finance and needs to recognize revenue when goods are shipped, not when invoiced. However, the standard process posts revenue at invoice time. What should the financial accountant configure to defer revenue recognition until shipment?

Accepted Answer

Enable Revenue recognition and configure revenue schedules to defer recognition until shipment.. To recognize revenue at shipment instead of invoice, the financial accountant should enable Revenue recognition and configure revenue schedules to defer recognition until shipment. This allows revenue to be recognized when the performance obligation is satisfied, which is at shipment.

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Post revenue using free text invoices at shipment time.

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Set up billing schedules that align revenue with shipping dates.

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Use prepayment invoices to record revenue upon shipment.

Question 12

A company uses Dynamics 365 Finance and needs to automate the process of converting purchase requisitions into purchase orders. Which feature should be used?

Accepted Answer

Configure a purchase requisition workflow that automatically generates a purchase order when the requisition is approved.. In Dynamics 365 Finance, the purchase requisition workflow can be configured with a specific step that automatically creates a purchase order upon final approval of the requisition. This is achieved by enabling the 'Purchase order generation' task in the workflow configuration, which converts approved requisition lines into a purchase order without manual intervention. This feature directly addresses the need to automate the conversion process, ensuring efficiency and reducing manual data entry.

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Set up a procurement catalog to define items that can be ordered.

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Enable vendor collaboration to allow vendors to create purchase orders.

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Use the Request for quotation (RFQ) process to select a vendor and create a purchase order.

Question 13

Refer to the exhibit. A company has configured budget control as shown. A user attempts to create a purchase order for $12,000. The system currently issues a warning but allows the transaction to proceed. The company wants to prevent any transaction exceeding the threshold from being posted. What should the budget controller change in the configuration?

Accepted Answer

Change the ActionOnExceed to Block.. Changing the ActionOnExceed to 'Block' will prevent any transaction exceeding the threshold from being posted. Currently, the action is set to 'Warn', which allows the transaction to proceed with a warning. Option A is incorrect because removing VendorInvoice from the Documents list would disable budget control for that document type, not change the behavior on exceed. Option B is incorrect because changing the BudgetModel to Revised Budget would affect which budget amounts are used for comparison, but not the action when exceeded. Option C is incorrect because changing the BudgetThreshold to $12,000 would match the exact amount, but the system would still issue a warning for amounts exceeding that threshold unless the action is changed to Block.

Answer

Remove VendorInvoice from the Documents list.

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Change the BudgetModel to Revised Budget.

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Change the BudgetThreshold to 12000.

Question 14

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?

Accepted Answer

Define a reporting currency in the ledger setup and use translation methods.. The recommended approach is to define a reporting currency in the ledger setup and use translation methods, as Dynamics 365 Finance supports dual-currency accounting where transactions are recorded in both the accounting currency and an additional reporting currency. This allows automatic translation of financial statements using defined exchange rate types and methods (e.g., current rate, average rate, historical rate) without manual adjustments. This ensures compliance with accounting standards and simplifies reporting.

Answer

Create a separate ledger for USD and manually adjust entries.

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

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Use the periodic exchange rate adjustment to update currency values.

Question 15

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.. Dynamics 365 Finance uses the Workflow framework to enforce approvals on business documents, and expense reports are one of the supported workflow types. Configuring an Expense report workflow with an approval step assigned to the employee's manager ensures the report cannot be reimbursed until the manager approves it. This is the standard, out-of-the-box mechanism for routing expense reports through approval before posting and payment.

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Configure a Project workflow for expense reports.

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Define expense policies that require manager sign-off.

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Use the Electronic reporting module to generate approval forms.