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

Question 1

You are a Dynamics 365 Finance consultant for Northwind Traders, a wholesale distribution company. The company uses Dynamics 365 Finance and is experiencing a problem with vendor payments. The accounts payable clerk reports that when running a payment proposal for a specific vendor, the system includes invoices that are not yet due. The company wants to pay invoices only on their due dates. You review the payment proposal setup and find that the payment proposal uses the default settings. You need to configure the payment proposal to include only invoices that are due on or before the payment date. Additionally, the company wants to apply a discount if payment is made within 10 days of the invoice date (a 2% cash discount). The payment terms must be set up accordingly. You need to ensure that the payment proposal correctly calculates cash discounts for early payment. What should you do?

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

Accepted Answer

Set the payment proposal date criterion to 'Due date' and set the offset to 0. Configure payment terms with a 2% discount if paid within 10 days.. To include only invoices due on or before the payment date, the 'Date criterion' for the payment proposal must be set to 'Due date' with an offset of 0. This ensures that only invoices whose due date is on or before the payment date are included. To apply a 2% cash discount for payment within 10 days, payment terms must be configured with a discount percentage of 2% and a discount period of 10 days. The system will then automatically calculate the discount when the payment is made within the discount period. Option A is incorrect because an offset of 30 would include invoices due up to 30 days after the payment date, which is not desired. Option B is incorrect because 'Payment date' criterion uses the invoice date, not the due date, so it would not filter by due date. Option D is incorrect because setting the date criterion to 'Discount date' would include invoices based on the discount date, but the company wants to pay on the due date; the requirement is to pay only invoices due on or before the payment date, not based on discount dates.

Answer

Set the payment proposal date criterion to 'Due date' and set the offset to 30. Configure payment terms with a 2% discount.

Answer

Set the payment proposal date criterion to 'Payment date' and set the offset to 10. Configure payment terms with a 2% discount if paid within 10 days.

Answer

Set the payment proposal date criterion to 'Discount date' to include invoices where the discount date has passed. Configure payment terms with a 2% discount.

Question 2

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.. Enabling budget control in General ledger parameters and defining budget check rules allows the system to perform a budget check when posting purchase invoices. Option B is incorrect because commitment accounting is used to track commitments for purchase orders, not to trigger budget checks during invoice posting. Option C is incorrect because budget planning workflows are for creating and approving budgets, not for checking them at transaction time. Option D is incorrect because creating budget register entries only records budget amounts; it does not enable automatic 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 3

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.. The intercompany accounting setup defines the specific due-to and due-from account mappings for each intercompany relationship. Without these mappings, the system cannot generate the offset entries, even if other settings are correct. Option B is wrong because currency configuration affects exchange rate calculations but not the creation of due-to/due-from accounts. Option C is wrong because while the chart of accounts must include intercompany accounts, the first verification step should be the mapping setup that tells the system which accounts to use. Option D is wrong because default financial dimensions do not control intercompany accounting entries.

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 4

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.. Settlement functionality in the customer payment journal allows the clerk to apply a partial payment to a specific invoice, such as the oldest one. Option A is incorrect because the collections process is used for managing overdue accounts, not for applying payments. Option B is incorrect because credit and collections parameters can auto-apply payments, but that is not the specific feature the clerk needs to manually apply to the oldest invoice. Option C is incorrect because a payment schedule is for installment payments, not for applying a single partial payment to an existing invoice.

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 5

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.. Recurring journal voucher is specifically designed to automate recurring entries like monthly depreciation. It allows you to set a schedule (e.g., first day of each month) to generate the journal automatically. Option B is incorrect because Periodic processing in Fixed assets is a general process, not a specific tool for recurring journal entries. Option C is incorrect because the Fixed assets journal is used for recording asset acquisitions, disposals, and adjustments, not for recurring depreciation postings. Option D is incorrect because a General journal with a template still requires manual initiation each period and does not automate the recurring schedule.

Answer

Periodic processing in Fixed assets.

Answer

Fixed assets journal.

Answer

General journal with a template.

Question 6

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.. The 'CheckLevel' for purchase invoices is set to 'None', which disables budget checks for that document type. Option B is incorrect because purchase invoices are a supported source document type for budget control. Option C is incorrect; while the account structure may lack financial dimensions, the primary issue is the CheckLevel setting. Option D is incorrect because budget control is enabled (as shown in the exhibit).

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 7

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.. 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 8

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.. 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 9

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.. The Tax engine in Dynamics 365 Finance allows you to configure tax rules and rates without customizing code, supporting multi-country compliance. Option A (General ledger parameters) is wrong because it deals with ledger setup, not specific tax configurations. Option B (Electronic reporting module) is wrong because it is used for generating regulatory reports, not for configuring tax rules. Option D (Feature management) is wrong because it enables or disables features, but does not manage tax configurations.

Answer

General ledger parameters.

Answer

Electronic reporting module.

Answer

Feature management.

Question 10

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.. The Consolidation module (Option B). This module is specifically designed to combine financial data from multiple legal entities into a single consolidated report. Option A (Budget consolidation) is incorrect because it deals with budget data, not general financial consolidation. Option C (Financial reporting module) is incorrect because it is used for creating reports, but the consolidation process is handled by the Consolidation module. Option D (Intercompany accounting) is incorrect because it manages transactions between entities, not the consolidation of their financial statements.

Answer

Budget consolidation.

Answer

Financial reporting module.

Answer

Intercompany accounting.

Question 11

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.. Three-way matching in Dynamics 365 Finance compares the purchase order, product receipt, and vendor invoice. Options B (Product receipt) and C (Purchase order) are the two components required for three-way matching, along with the vendor invoice. Option A (Vendor invoice) is the third component, not one of the two required in addition to itself. Therefore, A is incorrect. Option D (Packing slip) is not used in three-way matching, and Option E (General journal entry) is unrelated.

Answer

Vendor invoice.

Answer

Packing slip.

Answer

General journal entry.

Question 12

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, B, and C are correct. Budget proposal from historical data, cash flow forecasting, and customer payment predictions are AI-driven features in Dynamics 365 Finance. Option D (Financial reporting) is not AI-driven; it is a standard reporting capability. Option E (Vendor collaboration workspace) is a portal for vendor interactions, not an AI feature.

Answer

Financial reporting.

Answer

Vendor collaboration workspace.

Question 13

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.. 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 14

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.. Intercompany accounting rules must be set up to automatically map a sales invoice in one legal entity to a purchase transaction in another legal entity. These rules define the offset accounts and ensure that posting a sales invoice in Contoso Ltd. generates corresponding accounting entries in Contoso Manufacturing. Option A is incorrect because an intercompany journal is a manual process and would not trigger automatic postings. Option B is incorrect because a general journal entry in Contoso Manufacturing is also manual. Option C is incorrect because adding the IntercompanyPartner dimension to the sales invoice ensures the dimension is tracked, but without intercompany accounting rules, the automatic creation of entries in the subsidiary will not occur.

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 15

You are a Dynamics 365 Finance consultant for Northwind Traders, a wholesale distribution company. The company uses Dynamics 365 Finance and is experiencing a problem with vendor payments. The accounts payable clerk reports that when running a payment proposal for a specific vendor, the system includes invoices that are not yet due. The company wants to pay invoices only on their due dates. You review the payment proposal setup and find that the payment proposal uses the default settings. You need to configure the payment proposal to include only invoices that are due on or before the payment date. Additionally, the company wants to apply a discount if payment is made within 10 days of the invoice date (a 2% cash discount). The payment terms must be set up accordingly. You need to ensure that the payment proposal correctly calculates cash discounts for early payment. What should you do?

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

Accepted Answer

Configure elimination rules in the consolidation module to automatically generate elimination entries.. 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.