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

Question 1

A manufacturing company uses Dynamics 365 Finance to manage its financial operations. The finance team reports that when they post a purchase invoice for raw materials, the system automatically updates the general ledger and the inventory valuation. However, the team wants to ensure that the purchase invoice posting also triggers a budget check against the remaining budget for the raw materials account. Which configuration should you enable?

Accepted Answer

Enable budget control in General ledger parameters and define budget check rules for purchase invoices.. Option A is correct because the budget check is a prerequisite for budget control. Option B is wrong because budget register entries are used to record budget amounts, not to enable checks. Option C is wrong because budget planning is a separate process. Option D is wrong because commitment accounting is for encumbrances, not budget checks.

Answer

Activate commitment accounting for purchase orders.

Answer

Set up budget planning workflows to approve the budget.

Answer

Create budget register entries for the raw materials account.

Question 2

A company uses Dynamics 365 Finance with multiple legal entities. The accounting manager notices that when intercompany transactions are posted, the due-to and due-from accounts are not automatically created. The intercompany setup appears correct, but the transactions fail to generate the intercompany accounting entries. What should you verify first?

Accepted Answer

Check the intercompany accounting setup for the due-to and due-from account mappings.. Option C is correct because intercompany transactions require the intercompany accounting setup to define the offset accounts. Option A is wrong because the chart of accounts is necessary but not the root cause. Option B is wrong because currency setup affects exchange rates, not the generation of due-to/due-from. Option D is wrong because legal entity setup is required but unless accounting rules are defined, entries won't be created.

Answer

Confirm that the intercompany currency is properly configured.

Answer

Verify that the chart of accounts includes intercompany accounts.

Answer

Ensure each legal entity has a default financial dimension set.

Question 3

A retail company uses Dynamics 365 Finance to process customer payments. The accounts receivable clerk receives a payment from a customer that partially pays an invoice. The clerk wants to apply the payment to the oldest invoice first. Which feature should the clerk use?

Accepted Answer

Use the settlement functionality in the customer payment journal.. Option A is correct because settlement is used to apply payments to invoices. Option B is wrong because collections is for managing overdue payments. Option C is wrong because credit and collections is a module, not a specific feature for applying payments. Option D is wrong because payment schedules are for installment payments.

Answer

Run the collections process to identify the oldest invoice.

Answer

Configure the credit and collections parameters to auto-apply payments.

Answer

Create a payment schedule for the customer.

Question 4

A company uses Dynamics 365 Finance and wants to automate the process of posting recurring journal entries for monthly depreciation. The journal entries must be generated automatically on the first day of each month. Which tool should you use?

Accepted Answer

Recurring journal voucher.. Option D is correct because recurring journal voucher is designed for recurring entries like depreciation. Option A is wrong because general journal is for manual entries. Option B is wrong because periodic processing is a broader term, not a specific tool. Option C is wrong because fixed assets journal is for asset acquisitions and disposals, not depreciation posting.

Answer

Periodic processing in Fixed assets.

Answer

Fixed assets journal.

Answer

General journal with a template.

Question 5

Refer to the exhibit. A company has configured budget control in Dynamics 365 Finance as shown. The finance team reports that when posting a purchase invoice for raw materials, no budget check is performed. What is the most likely cause?

Accepted Answer

The CheckLevel is set to "None", disabling budget checks for purchase invoices.. Option B is correct because the CheckLevel is set to "None", meaning budget checks are disabled for purchase invoices. Option A is wrong because the account structure is defined. Option C is wrong because the source document type is correct. Option D is wrong because budget control is enabled.

Answer

The source document type is not supported for budget control.

Answer

The account structure does not include any financial dimensions.

Answer

Budget control is not enabled in the system.

Question 6

A company uses Dynamics 365 Finance and needs to track expenses by department and project. Which feature should be configured to capture this information on all financial transactions?

Accepted Answer

Financial dimensions.. Option C is correct because financial dimensions allow tracking by department, project, and other dimensions. Option A is wrong because the chart of accounts structures the main accounts but does not capture additional dimensions. Option B is wrong because cost accounting is for internal cost management. Option D is wrong because budgeting is for planning.

Answer

Chart of accounts.

Answer

Cost accounting module.

Answer

Budget control.

Question 7

Your organization uses Dynamics 365 Finance and wants to automate the reconciliation of bank transactions with general ledger entries. The bank sends a monthly statement in CSV format. What is the recommended approach?

Accepted Answer

Use the bank reconciliation workspace to import the CSV and match transactions.. Option A is correct because the bank reconciliation module imports bank statements and automates matching. Option B is wrong because the general journal is for manual entries. Option C is wrong because the cash and bank management module is broader but the specific feature is bank reconciliation. Option D is wrong because data import/export is a utility, not a reconciliation tool.

Answer

Manually post the bank statement lines as general journal entries.

Answer

Set up the cash and bank management module to automatically reconcile.

Answer

Use the data management framework to import the CSV and create a custom reconciliation process.

Question 8

A multinational company using Dynamics 365 Finance needs to comply with local tax reporting requirements in multiple countries. The tax rates and rules change frequently. Which tool should you use to manage tax configurations without customizing the code?

Accepted Answer

Tax engine.. Option B is correct because the tax engine allows configuration of tax rules without code. Option A is wrong because the general ledger is for accounting entries. Option C is wrong because the electronic reporting module is for generating reports, not managing tax rules. Option D is wrong because the feature management tool enables/disables features, not tax configurations.

Answer

General ledger parameters.

Answer

Electronic reporting module.

Answer

Feature management.

Question 9

A company uses Dynamics 365 Finance and needs to create a consolidated financial report that combines data from multiple legal entities. Which feature should be used?

Accepted Answer

Consolidation module.. Option C is correct because consolidation in Dynamics 365 Finance combines financial data from multiple entities. Option A is wrong because financial reporting is for reports within one entity. Option B is wrong because intercompany accounting posts transactions between entities, not consolidation. Option D is wrong because budget consolidation is for budgets.

Answer

Budget consolidation.

Answer

Financial reporting module.

Answer

Intercompany accounting.

Question 10

A company uses Dynamics 365 Finance and wants to implement a three-way matching policy for purchase invoices. Which TWO components are required for three-way matching?

Accepted Answer

Product receipt.. Option A and C are correct. Three-way matching compares the purchase order, product receipt, and invoice. Option B is wrong because the vendor invoice is part of the invoice document. Option D is wrong because the packing slip is not typically used. Option E is wrong because the general journal is not part of matching.

Answer

Vendor invoice.

Answer

Packing slip.

Answer

General journal entry.

Question 11

A company uses Dynamics 365 Finance and is planning to use AI capabilities to improve financial forecasting. Which THREE features are available in Dynamics 365 Finance for AI-driven forecasting?

Accepted Answer

Budget proposal from historical data.. Options A, C, and D are correct. Cash flow forecasting, budget proposal, and customer payment predictions are AI features. Option B is wrong because financial reporting is not AI-driven. Option E is wrong because vendor collaboration is a portal, not AI.

Answer

Financial reporting.

Answer

Vendor collaboration workspace.

Question 12

A company uses Dynamics 365 Finance and needs to set up a new fiscal year. Which THREE steps are required to open the new fiscal year?

Accepted Answer

Run the opening transactions process to bring forward balances.. Option A is correct because running the opening transactions process is required to bring forward the ending balances from the previous fiscal year into the new fiscal year as opening balances. In Dynamics 365 Finance, this step ensures that general ledger accounts, such as balance sheet accounts, carry forward their balances so the new year starts with accurate financial data.

Answer

Configure financial dimensions for the new year.

Answer

Set up budget control for the new fiscal year.

Question 13

Your organization is a medium-sized manufacturing company that has recently implemented Dynamics 365 Finance. The company has two legal entities: Contoso Ltd. (the main company) and Contoso Manufacturing (a subsidiary). The finance department needs to process intercompany transactions where Contoso Ltd. sells raw materials to Contoso Manufacturing. The transaction must automatically create accounting entries in both legal entities: a sale in Contoso Ltd. and a purchase in Contoso Manufacturing. Additionally, the intercompany transactions must be tracked using a specific financial dimension called "IntercompanyPartner". You have set up the legal entities and the chart of accounts. The intercompany accounting setup has been configured with the appropriate due-to and due-from accounts. However, when you post a sales invoice from Contoso Ltd. to Contoso Manufacturing, no accounting entries are generated in Contoso Manufacturing. What should you do to ensure the intercompany accounting entries are created automatically?

Accepted Answer

Set up intercompany accounting rules that map the sales invoice to the purchase transaction.. Option C is correct because the intercompany accounting rules define the offset accounts and must be configured for automatic posting. Option A is wrong because the intercompany journal is for manual entries, not automatic. Option B is wrong because the general journal is also manual. Option D is wrong because financial dimensions are not the cause of missing entries.

Answer

Create an intercompany journal in Contoso Ltd. to record the transaction.

Answer

Post a general journal entry in Contoso Manufacturing to record the purchase.

Answer

Add the IntercompanyPartner dimension to the sales invoice.

Question 14

You are a Dynamics 365 Finance consultant for a retail company that operates in multiple countries. The company uses Dynamics 365 Finance with the following configuration: The main legal entity is based in the United States (US), and there are subsidiary legal entities in Canada (CA) and the United Kingdom (UK). The finance team needs to generate consolidated financial reports that combine data from all three entities. Additionally, the company wants to automate the elimination of intercompany transactions during consolidation. The company also needs to comply with local tax reporting requirements in each country. The tax rates and rules change frequently, and the company wants to manage these changes without modifying the source code. You have set up the consolidation module and the tax engine. However, during the consolidation process, you notice that the intercompany transactions are not being eliminated, and the consolidated report shows double-counting. What should you do to automatically eliminate intercompany transactions during consolidation?

Accepted Answer

Configure elimination rules in the consolidation module to automatically generate elimination entries.. Option B is correct because elimination rules automate the removal of intercompany balances. Option A is wrong because manual journal entries are not automated. Option C is wrong because intercompany accounting is for transaction posting, not elimination. Option D is wrong because the consolidation online feature is for real-time consolidation but does not automatically eliminate.

Answer

Create manual journal entries to eliminate intercompany balances after consolidation.

Answer

Set up intercompany accounting to post elimination entries automatically.

Answer

Use the consolidation online feature to eliminate transactions in real time.

Question 15

You are a Dynamics 365 Finance administrator for a small business that uses Dynamics 365 Finance for financial management. The company has a single legal entity and uses the cash basis accounting method for tax purposes. The company recently hired a new accountant who is unfamiliar with the system. The accountant needs to record a vendor invoice for office supplies. The invoice is from a vendor already set up in the system. The invoice amount is $500, and the applicable tax rate is 8%. The accountant wants to ensure that the invoice is posted correctly and that the tax amount is calculated automatically. Which steps should the accountant take to record the vendor invoice?

Accepted Answer

Open the vendor invoice journal, select the vendor, enter the invoice number, invoice date, amount, and post. The tax will be calculated automatically.. Option A is correct because the vendor invoice journal is the standard method to record vendor invoices with automatic tax calculation. Option B is wrong because the general journal is not for vendor invoices. Option C is wrong because the purchase order is not needed for a simple invoice. Option D is wrong because the payment journal is for payments, not invoices.

Answer

Create a purchase order for the supplies, then post a vendor invoice based on the purchase order.

Answer

Open the general journal, select the vendor account, enter the debit and credit entries manually, and post.

Answer

Open the payment journal, select the vendor, enter the invoice details, and post the payment.