MB-920 Describe Dynamics 365 Finance Practice Test 17 — 15 Questions

Question 1

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?

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

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.. The vendor invoice journal is the standard method to record vendor invoices with automatic tax calculation. Option A is wrong because a purchase order is not required for a simple vendor invoice; it is typically used for procure-to-purchase processes. Option C is wrong because the general journal is for manual journal entries, not vendor invoices. Option D is wrong because the payment journal is used for recording 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.

Question 2

A manufacturing company uses Dynamics 365 Finance. The procurement team notices that purchase order (PO) approvals are taking too long because managers are frequently out of office. They want to configure a fallback approval process. What should you do?

Accepted Answer

Configure an alternate approver or escalation step in the purchase order approval workflow.. Dynamics 365 Finance allows you to configure alternate approvers or escalation steps in the purchase order approval workflow. This built-in feature automatically routes approvals to a designated fallback when the primary approver is unavailable, addressing the delay issue. Option A is incorrect because manual delegation is not an automated fallback and relies on managers remembering to delegate. Option B is incorrect because reassigning manually via workflow history is not automated and does not provide a consistent fallback process. Option C is incorrect because while Power Automate could be used, it is an external tool and not the native built-in method within Dynamics 365 Finance; the recommended approach is to use the workflow configuration.

Answer

Instruct managers to delegate their approvals to a colleague before leaving.

Answer

Use the workflow history to identify pending approvals and reassign them.

Answer

Create a Microsoft Power Automate flow to reassign the PO when the manager is out of office.

Question 3

Your organization is configuring a purchase order approval workflow in Dynamics 365 Finance. The exhibit shows a JSON representation of the workflow step. After implementation, POs are automatically approved when the manager does not act within 48 hours, bypassing the intended VP of Procurement. What is the most likely cause?

Accepted Answer

The escalation action is set to 'Approve' instead of 'Escalate'.. The workflow JSON shows 'escalationAction': 'Approve', meaning if the time limit expires, the purchase order is automatically approved rather than routed to the fallback approver (VP of Procurement). To send the PO to the VP after the manager fails to act, the escalationAction should be 'Escalate' or 'Assign' to the fallback. Option A is incorrect because the 48-hour time limit itself is not the problem; the action taken after the limit is. Option C is incorrect because the fallback is correctly set to VP of Procurement, but it is unused due to the escalation action. Option D is incorrect because the assignee being 'Manager' is the intended first-level approver; the issue is not the assignment but the escalation behavior.

Answer

The time limit is set to 48 hours.

Answer

The fallback approver is set to VP of Procurement.

Answer

The assignee is set to Manager.

Question 4

A company uses Dynamics 365 Finance for financial management. The CFO wants to use AI to predict customer payment delays and recommend proactive actions. Which feature should you use?

Accepted Answer

Customer payment predictions. Dynamics 365 Finance includes AI-driven customer payment predictions that provide insights and recommendations for proactive actions. Option B is wrong because cash flow forecasting focuses on projecting cash inflows and outflows, not specifically predicting payment delays. Option C is wrong because Microsoft Copilot in Finance is for conversational assistance and does not specialize in payment predictions. Option D is wrong because budgeting and planning is for creating and managing budgets, not predicting payment delays.

Answer

Cash flow forecasting

Answer

Microsoft Copilot in Finance

Answer

Budgeting and planning

Question 5

Your organization is implementing Dynamics 365 Finance and needs to ensure that intercompany transactions are automatically reconciled. Which setup is required?

Accepted Answer

Set up intercompany accounting and define intercompany partners.. Setting up intercompany accounting and defining intercompany partners is required for automatic reconciliation of intercompany transactions. Option A is incorrect because elimination rules are part of consolidation processes used to remove intercompany balances, not for automatic reconciliation. Option B is incorrect because allocation rules are used for distributing costs, not for intercompany reconciliation. Option D is incorrect because consolidation processes combine financial statements of multiple legal entities, which is distinct from intercompany transaction reconciliation.

Answer

Define elimination rules for intercompany transactions.

Answer

Create allocation rules for intercompany charges.

Answer

Configure consolidation processes.

Question 6

A company uses Dynamics 365 Finance with dual-currency accounting. They have transactions in both USD and EUR. The general ledger is set to USD, but a user posts a vendor invoice in EUR without specifying an exchange rate. The system posts the invoice at a rate of 0. The next day, the exchange rate for EUR/USD is 1.10. What is the impact on the general ledger?

Accepted Answer

The invoice is posted with a zero USD amount, causing an imbalance.. When a vendor invoice is posted in a currency other than the ledger currency without an exchange rate specified, Dynamics 365 Finance uses the default exchange rate. If no default rate is configured, the rate is zero, resulting in a zero amount in the ledger currency (USD) and causing an imbalance in the general ledger. Option A is incorrect because the system does not reject the invoice; it posts with the available rate (zero). Option B is incorrect because the system does not automatically update the invoice after posting with a later exchange rate; the rate at the time of posting is used. Option D is incorrect because the system does not automatically create an exchange rate difference journal when the rate is zero; exchange rate differences are calculated only when the transaction is settled.

Answer

The system rejects the invoice due to a missing exchange rate.

Answer

The system automatically updates the invoice using the next day's rate of 1.10.

Answer

The system posts the invoice and creates an exchange rate difference journal.

Question 7

A retail company uses Dynamics 365 Finance for financial operations. They want to automate the process of posting daily sales to the general ledger. Which feature should they use?

Accepted Answer

Create a batch job to post sales orders automatically.. Dynamics 365 Finance allows you to create a batch job that automatically posts sales orders to the general ledger at scheduled intervals. Option A is incorrect because recurring invoices are used for billing customers on a regular basis, not for posting aggregated daily sales. Option C is incorrect because the general journal is typically used for manual adjustments and one-time entries. Option D is incorrect because the payment journal is for recording payments received, not for posting sales transactions.

Answer

Use the recurring invoice functionality.

Answer

Post a general journal with the total sales amount.

Answer

Set up a payment journal for daily sales.

Question 8

Your organization uses Dynamics 365 Finance and needs to track expenses by project for a construction project. Which module and configuration should you use?

Accepted Answer

Project management and accounting module with cost categories and budgets.. The Project management and accounting module is designed for project cost tracking and budgeting. It supports cost categories and budgets per project, which is ideal for construction projects. Option A is incorrect because the Fixed assets module is for tracking fixed assets, not project expenses. Option B is incorrect because the Budgeting module is for general financial budgets, not project-specific cost tracking. Option D is incorrect because the Expense management module is for employee expense reports, not project cost tracking.

Answer

Fixed assets module with asset tracking.

Answer

Budgeting module with budget control.

Answer

Expense management module with expense categories.

Question 9

A company wants to use Dynamics 365 Finance to manage its cash flow. Which feature allows them to forecast future cash positions based on historical data and expected payments?

Accepted Answer

Cash flow forecasting. The cash flow forecasting feature in Dynamics 365 Finance uses historical and expected data to predict future cash positions. Option A (General ledger) is wrong because it records transactions, not forecasts. Option C (Bank reconciliation) is wrong because it matches bank statements, not predicts cash flow. Option D (Payment schedules) is wrong because it manages installment payments, not forecasts.

Answer

General ledger

Answer

Bank reconciliation

Answer

Payment schedules

Question 10

A multinational company uses Dynamics 365 Finance with multiple legal entities. They want to streamline intercompany invoicing by automatically creating invoices for intercompany purchases when a purchase order is confirmed. What configuration is required?

Accepted Answer

Configure intercompany parameters to automatically post invoices on purchase order confirmation.. Dynamics 365 Finance allows you to configure intercompany parameters to automatically generate intercompany invoices when purchase orders are confirmed. Option B is incorrect because using vendor invoices manually is not automatic and does not streamline the process. Option C is incorrect because purchase agreements define terms between legal entities but do not automatically create invoices upon purchase order confirmation. Option D is incorrect because recurring invoices are for repetitive invoicing to customers, not for intercompany transactions triggered by purchase orders.

Answer

Use vendor invoices to manually record intercompany transactions.

Answer

Create a purchase agreement between legal entities.

Answer

Set up recurring invoices for each intercompany relationship.

Question 11

Which TWO of the following are true about the general journal in Dynamics 365 Finance?

Accepted Answer

They can be used to post adjustments and accruals.. General journals are used for non-standard transactions such as adjustments and accruals. Option C is correct because general journals can be configured with approval workflows. Option B is incorrect because general journals post directly to the general ledger, not automatically to subledgers; subledger posting is handled through dedicated modules. Option D is incorrect because reversing entries are supported in general journals. Option E is incorrect because a single general journal can include multiple legal entities.

Answer

They automatically post to subledgers like Accounts Payable.

Answer

They cannot be reversed.

Answer

They can only be used for one legal entity at a time.

Question 12

Which THREE of the following are valid methods to reduce the number of vendor invoices posted manually in Dynamics 365 Finance?

Accepted Answer

Enable vendor collaboration for electronic invoice submission.. Vendor collaboration enables vendors to submit invoices electronically, reducing manual data entry. Option C is correct because optical character recognition (OCR) digitizes paper invoices and automates data capture. Option D is correct because configuring purchase order matching allows automatic posting of invoices that match purchase orders, reducing manual effort. Option B is incorrect because the payment journal is used for recording payments, not for automating invoice posting. Option E is incorrect because manually entering all invoices increases manual effort, which is the opposite of the goal.

Answer

Use the payment journal to record invoices.

Answer

Manually enter all invoices to ensure accuracy.

Question 13

Which TWO of the following are core financial modules in Dynamics 365 Finance?

Accepted Answer

Accounts payable. The correct answers are C (Accounts payable) and D (General ledger), which are core financial modules in Dynamics 365 Finance. Accounts payable manages vendor invoices and payments, while General ledger serves as the central repository for financial transactions. Option A (Sales and marketing) is part of Dynamics 365 Sales, not Finance. Option B (Human resources) belongs to Dynamics 365 Human Resources. Option E (Project management) is a project accounting module but is not considered a core financial module in the same sense as Accounts payable and General ledger.

Answer

Sales and marketing

Answer

Human resources

Answer

Project management

Question 14

Contoso Ltd. is a global manufacturing company with legal entities in the US (USD), UK (GBP), and Germany (EUR). They use Dynamics 365 Finance. The CFO wants a consolidated financial report that combines data from all entities into USD, using month-end exchange rates. The consolidation must be performed monthly, and adjustments should be automatically eliminated. The company also needs to maintain separate accounting rules for each entity (e.g., GAAP vs. IFRS). You are tasked with configuring the consolidation process. What should you do?

Accepted Answer

Set up a consolidation group, define exchange rates, configure elimination rules, and run the consolidation process online.. The consolidation module in Dynamics 365 Finance enables you to set up a consolidation group containing the relevant legal entities, define exchange rates (e.g., month-end rates), configure elimination rules to automatically remove intercompany transactions, and run the consolidation process online. This automates the monthly consolidation into USD while respecting each entity's accounting rules (GAAP/IFRS). Option A is incorrect because intercompany accounting handles transactions between entities, not the consolidated reporting of separate entities. Option B is incorrect because manually exporting/importing trial balances to Excel is error-prone and does not automate the process. Option C is incorrect because a general journal is for manual adjustments, not for running an automated consolidation that includes currency conversion and eliminations.

Answer

Configure intercompany accounting and use the intercompany reconciliation report.

Answer

Export each entity's trial balance to Excel, apply exchange rates, and import to a consolidated company.

Answer

Create a general journal to manually post consolidated entries using exchange rates.

Question 15

Northwind Traders uses Dynamics 365 Finance for financial operations. They have a high volume of vendor invoices (5000 per month). Currently, invoices are manually entered into the system. The AP team is overwhelmed and making errors. The company wants to implement automation using AI to capture invoice data from PDFs and emails, and automatically match them to purchase orders. They also want to set up approval workflows for invoices that do not match. You are the Dynamics 365 consultant. What should you recommend?

Accepted Answer

Implement Microsoft Dynamics 365 Invoice capture to automatically extract invoice data and use PO matching with approval workflows.. The Dynamics 365 Invoice capture add-in uses AI to extract data from PDFs and emails, and can be integrated with Dynamics 365 Finance. It supports PO matching and approval workflows for unmatched invoices. Option A is wrong because hiring temporary staff does not address automation. Option B is wrong because vendor collaboration allows vendors to enter invoices but does not automate extraction from PDFs/emails. Option D is wrong because Power Automate alone cannot perform OCR/AI invoice capture and still requires manual entry.

Answer

Hire temporary staff to enter invoices and use a batch posting job.

Answer

Enable vendor collaboration so vendors can enter invoices directly.

Answer

Use Microsoft Power Automate to process invoices and send them to the AP team for manual entry.