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

Question 1

A company uses Dynamics 365 Finance and needs to track the financial performance of individual projects. Costs for materials, labor, and overhead must be recorded against each project. Which module should be used to manage this?

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

Accepted Answer

Project management and accounting. Project management and accounting in Dynamics 365 Finance is specifically designed to track the financial performance of projects, including costs for materials, labor, and overhead. It allows the creation of project budgets, cost tracking, revenue recognition, and profitability analysis. This module provides the necessary tools to record and categorize expenses against each project, enabling accurate financial management.

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Procurement and sourcing

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Production control

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Fixed assets

Question 2

Which TWO actions should a Dynamics 365 Finance administrator take to ensure that intercompany transactions are automatically reconciled and eliminated during consolidation?

Accepted Answer

Set up an elimination rule for intercompany transactions.. Option A is correct because an elimination rule in Dynamics 365 Finance is the mechanism that automatically removes intercompany balances and transactions during consolidation, ensuring they are reconciled and eliminated rather than carried into the consolidated results. Option C is correct because configuring intercompany accounting to automatically generate matching (offsetting) transactions in both legal entities keeps the reciprocal intercompany entries synchronized, which is the prerequisite for those balances to reconcile and be eliminated cleanly. Option B is not correct because the Consolidation online feature merely transfers account balances into a consolidation legal entity; it does not by itself reconcile or eliminate intercompany transactions. Option D is not correct because consolidation groups only define which legal entities are combined for reporting and do not perform reconciliation or elimination. Option E is not correct because an intercompany workflow only routes transactions for approval and does not automate reconciliation or elimination.

Answer

Use the Consolidation online feature to transfer balances.

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Define consolidation groups to group legal entities.

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Create an intercompany workflow to approve transactions.

Question 3

Refer to the exhibit. A financial analyst needs to post an expense to the Research & Development cost center. They attempt to use the value 'R&D001' but the system does not accept it. The dimension value shown in the exhibit is the only valid value for R&D. What is the most likely reason the entry fails?

Accepted Answer

The dimension value must match 'CC001' exactly.. In Dynamics 365 Finance, financial dimension values are stored and validated by their exact value ID, not by a friendly description or name. The exhibit shows the only valid value for the R&D cost center is 'CC001', so entering 'R&D001' fails validation because it does not match any dimension value in the CostCenter dimension.

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The dimension description must be entered instead of the value.

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The dimension name must be included in the value.

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Cost centers are not financial dimensions; they are separate.

Question 4

Refer to the exhibit. The period close checklist shows that adjusting entries are pending and depreciation has not started. The accountant wants to run the consolidation process now. What will happen if they attempt to consolidate before completing the other steps?

Accepted Answer

Consolidation can proceed but may produce inaccurate results because adjusting entries and depreciation are missing.. In Dynamics 365 Finance, the period close workspace allows consolidation to be initiated even when prerequisite tasks like adjusting entries and depreciation are incomplete. The system does not enforce a hard gate on these steps, so consolidation will run and produce financial data — but that data will be inaccurate because the missing adjustments and depreciation are not reflected. This is why the correct answer is that consolidation proceeds but may yield incorrect results.

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The system will block the consolidation until all steps are completed.

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The consolidation process will fail due to missing depreciation.

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The system will automatically post the pending steps before consolidation.

Question 5

A company uses Dynamics 365 Finance. The finance team needs to automate periodic tasks such as creating ledger settlements and running month-end closing processes. Which feature should they use?

Accepted Answer

Batch job processing. Batch job processing in Dynamics 365 Finance is designed to automate periodic and background tasks such as ledger settlements, month-end closing, and other recurring processes. Users can schedule batch jobs to run at specific times or recurrences, offloading work from interactive sessions. This is the standard feature for automating repetitive financial operations.

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Bank reconciliation

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Vendor invoice pool

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Financial reporting

Question 6

A company uses Dynamics 365 Finance. The accountant needs to view the current balance of a specific ledger account at any time. Which inquiry should they use?

Accepted Answer

Trial balance. Trial balance shows the balance of each ledger account for a specified period, allowing the accountant to view the current balance. Option B is incorrect because Ledger settlement is used for matching debits and credits, not for viewing balances. Option C is incorrect because Chart of accounts is a list of accounts, not balances. Option D is incorrect because Financial reporting generates reports but not real-time balance for a single account.

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Ledger settlement

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Chart of accounts

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Financial reporting

Question 7

A company uses Dynamics 365 Finance. They want to automatically generate vendor payments based on due dates and available cash discounts. Which payment proposal type should they use?

Accepted Answer

Due date proposal. The correct option is A, Due date proposal, because it generates vendor payment proposals by selecting open vendor transactions whose due dates fall within a specified date range, and it can factor in available cash discounts when the proposal is created. This matches the requirement to automatically generate payments based on due dates and cash discounts in Dynamics 365 Finance. The Discount proposal (B) focuses on transactions with cash discounts available, but it is not the standard proposal type used to drive payments primarily by due date. The Open transactions proposal (C) simply includes open transactions without the due-date-driven logic, and the Specific invoices proposal (D) requires manually selecting individual invoices rather than automating the process.

Answer

Discount proposal

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Open transactions proposal

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Specific invoices proposal

Question 8

Which TWO features in Dynamics 365 Finance support compliance with regulatory reporting requirements for financial statements?

Accepted Answer

Electronic reporting. Electronic reporting (C) is correct because it provides a configurable engine for defining and generating statutory, tax, and financial statement formats required by different regulatory authorities, including e-invoicing and country-specific reporting schemas. Financial reporting (E) is correct because it produces the balance sheet, income statement, cash flow, and other financial statements in the formats needed for external regulatory and statutory filing. Budget control (A) is not correct because it enforces spending limits on budget accounts rather than producing regulatory financial statements. Intercompany accounting (B) is not correct because it handles transactions and reconciliation between legal entities, not regulatory statement output. Fixed assets management (D) is not correct because it tracks and depreciates assets rather than generating regulatory financial reports.

Answer

Budget control

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Intercompany accounting

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Fixed assets management

Question 9

Which THREE components are part of the Dynamics 365 Finance General ledger module?

Accepted Answer

Main accounts. In Dynamics 365 Finance, the General ledger module is built around the chart of accounts (D), which defines the structure of all ledger accounts used for financial posting, and the main accounts (B), which are the individual accounts within that structure where transactions are recorded. The ledger calendar (C) is also a core General ledger component because it defines the fiscal calendar, periods, and module statuses that control when and how ledger transactions can be posted. Inventory posting profiles (A) belong to the Inventory management module, where they map inventory transactions to ledger accounts, and payment schedules (E) belong to Accounts payable/Accounts receivable terms of payment setup, not the General ledger module itself.

Answer

Inventory posting profiles

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Payment schedule

Question 10

A manufacturing company wants to track the cost of raw materials from purchase to finished goods. Which module in Dynamics 365 Finance should they primarily use?

Accepted Answer

Inventory management. Inventory management is the primary module for tracking raw material costs from purchase through production to finished goods. It integrates with production control to calculate actual costs. Accounts payable handles vendor invoices, not cost tracking. Budgeting is for financial planning, not operational cost tracking. General ledger provides high-level financial reporting, not detailed cost tracking.

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Accounts payable

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Budgeting

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General ledger

Question 11

A company is implementing Dynamics 365 Finance and needs to ensure that all purchase orders over $10,000 require approval from a manager. What is the best approach to configure this?

Accepted Answer

Create a purchase order approval workflow. Correct: A purchase order approval workflow can be configured to require approval based on thresholds such as amount. Option B is wrong because procurement policies govern vendor selection and procurement processes, not approval thresholds. Option C is wrong because budget control rules enforce budget limits but do not trigger approvals for specific amounts. Option D is wrong because security roles control access to features, not approval processes.

Answer

Configure a procurement policy

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Set up a budget control rule

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Assign a security role to managers

Question 12

A company wants to automate the generation of vendor payments based on due dates. Which Dynamics 365 Finance feature should they use?

Accepted Answer

Payment proposals. Correct: Payment proposals automate payment generation. Option A (Cash flow forecasting) is wrong because it is used for predicting cash positions, not initiating payments. Option B (Purchase agreements) is wrong because they define contract pricing and terms, not payment processing. Option D (Vendor invoice capture) is wrong because it is for capturing invoice data, not generating payments.

Answer

Cash flow forecasting

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Purchase agreements

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Vendor invoice capture

Question 13

A company is migrating from a legacy system to Dynamics 365 Finance. They have historical data that must be imported with proper financial dimensions. What is the recommended approach?

Accepted Answer

Use the Data management framework. The Data management framework (DMF) is the recommended tool for importing historical data with financial dimensions into Dynamics 365 Finance. It supports data entities that map to financial dimension structures, allows staging and validation before load, and handles the dimension combinations required for general ledger integrity.

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Use the Excel add-in to manually enter data

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Build a custom app in Power Platform

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Use Entity store for data import

Question 14

A company uses Dynamics 365 Finance and wants to streamline the process of reconciling bank statements with ledger entries. What feature should they use?

Accepted Answer

Bank reconciliation. Bank reconciliation in Dynamics 365 Finance is the dedicated feature for matching bank statement lines with ledger and bank transactions, and for resolving discrepancies. It provides a reconciliation worksheet, automatic matching rules, and the ability to post adjustments. This directly addresses the requirement to streamline reconciling bank statements with ledger entries.

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Budget control

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Cash flow forecasting

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Payment proposals

Question 15

A company needs to comply with a new regulation requiring that all journal entries be approved by a supervisor before posting. The company uses Dynamics 365 Finance. What should they configure?

Accepted Answer

Create a journal approval workflow. A journal approval workflow in Dynamics 365 Finance enforces a supervisory review step before journal entries can be posted. Workflows are configured in the General ledger module and can route journal entries to designated approvers based on rules such as amount thresholds, journal names, or legal entity. This directly satisfies the regulatory requirement that all journal entries be approved by a supervisor before posting.

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Configure financial dimension sets

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Modify general ledger parameters

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Enable audit trail settings