MB-920 Describe Dynamics 365 Finance Practice Test 18 — 15 Questions

Question 1

Which TWO are key features of Dynamics 365 Finance?

Accepted Answer

Financial reporting. Option D (Financial reporting) is correct because Dynamics 365 Finance includes core general ledger capabilities that produce financial statements such as balance sheets, income statements, and cash flow reports, along with configurable financial dimensions and reporting via Financial Reporter and Management Reporter. Option E (Budgeting) is correct because Dynamics 365 Finance provides budget planning, budget control, and budget register entries that let organizations create, approve, and enforce budgets against actual transactions. The unmarked options do not belong: Human resources (A) is a separate Dynamics 365 Human Resources app, Inventory management (B) is a core capability of Dynamics 365 Supply Chain Management, and Customer relationship management (C) belongs to Dynamics 365 Sales/Customer Engagement rather than Finance.

Answer

Human resources

Answer

Inventory management

Answer

Customer relationship management

Question 2

Which TWO are benefits of using Copilot in Dynamics 365 Finance?

Accepted Answer

Automated data entry suggestions. Option A (Automated data entry suggestions) is correct because Copilot in Dynamics 365 Finance uses AI to help users complete forms and fields faster by suggesting values and reducing repetitive manual input, which improves efficiency and accuracy. Option C (Natural language query for financial reports) is correct because Copilot enables users to ask questions in plain language and receive generated insights or report summaries, making financial data more accessible without deep report-building expertise. Option B (Automatic tax calculation) is not a Copilot benefit; tax determination is handled by the Tax module and configuration, not by Copilot. Option D (Elimination of manual journal entries) is incorrect because Copilot assists with creating or suggesting entries but does not remove the need for human journal entry work. Option E (Direct ledger postings without approval) is incorrect because posting to the ledger still follows configured accounting rules, workflows, and approval controls.

Answer

Automatic tax calculation

Answer

Elimination of manual journal entries

Answer

Direct ledger postings without approval

Question 3

Refer to the exhibit. A data entity export shows the above record for a vendor transaction. Which Dynamics 365 Finance module is this data most likely from?

Accepted Answer

Accounts payable. The exhibit shows a vendor transaction record, which is characteristic of the Accounts payable module. Vendor transactions include invoices, payments, credit notes, and settlements tied to a vendor account, all managed within Accounts payable.

Answer

Fixed assets

Answer

General ledger

Answer

Sales tax

Question 4

A manufacturing company uses Dynamics 365 Finance to manage its financial operations. The finance team reports that when they post a purchase invoice, the system occasionally fails to update the general ledger correctly. What is the most likely cause of this issue?

Accepted Answer

Incorrect vendor (Accounts payable) posting profiles. The most likely cause is an incorrectly configured vendor (Accounts payable) posting profile. In Dynamics 365 Finance, the vendor posting profile determines the summary and ledger accounts used when a purchase invoice is posted, so a misconfigured vendor posting profile causes the general ledger to be updated with wrong or missing account entries. Inventory posting profiles map inventory transactions (receipts, issues, etc.) to ledger accounts and are not the primary determinant for purchase invoice GL posting. Options B, C, and D do not fit: audit policies only track database changes and do not affect ledger posting, budget control settings block or warn on budget overruns rather than cause incorrect GL updates, and payment schedules only control due date distribution of payments, not general ledger account determination.

Answer

Improperly configured audit policies

Answer

Budget control settings are too restrictive

Answer

Incorrect payment schedule setup

Question 5

A retail company wants to automate the reconciliation of bank statements with ledger entries in Dynamics 365 Finance. Which feature should they use?

Accepted Answer

Advanced bank reconciliation. Advanced bank reconciliation in Dynamics 365 Finance is purpose-built to import bank statements (via MT940, BAI2, ISO 20022 camt.053, or CSV) and automatically match them against ledger bank transactions. It supports matching rules, reconciliation tolerances, and posting of unreconciled differences, which is exactly what statement-to-ledger reconciliation requires.

Answer

Cash flow forecasting

Answer

Payment journal

Answer

General journal

Question 6

A service company uses Dynamics 365 Finance to manage fixed assets. They recently acquired a building and want to split the cost between land (non-depreciable) and building (depreciable). How should they set this up?

Accepted Answer

Create two fixed asset records: one for land with non-depreciable profile, and one for building with depreciable profile. In Dynamics 365 Finance, land and buildings must be set up as separate fixed asset records because land is non-depreciable while buildings are depreciable. Each asset record is linked to a book with the appropriate depreciation profile — land uses a non-depreciable profile, and the building uses a depreciable profile. This ensures correct depreciation calculation and financial reporting.

Answer

Create one fixed asset record for the total cost and manually adjust depreciation

Answer

Use the 'Component Depreciation' feature to split the asset

Answer

Create a parent asset for the building and a sub-asset for the land

Question 7

A company wants to use Dynamics 365 Finance to track budget versus actuals for each department. What should they configure?

Accepted Answer

Budget control configuration. Budget control configuration in Dynamics 365 Finance is the feature that enables tracking of budget versus actuals by defining budget models, budget codes, and budget control rules. It allows organizations to set up budget checks, encumbrances, and reporting to compare planned budgets against actual expenditures for each department.

Answer

Financial dimensions

Answer

Chart of accounts

Answer

General journal

Question 8

An organization is implementing Dynamics 365 Finance and needs to ensure that all vendor invoices are approved before payment. They want to automate three-way matching for purchase order invoices. What must be set up?

Accepted Answer

Accounts payable parameters, invoice matching workflow, and vendor tolerances. Three-way matching in Dynamics 365 Finance requires all three components: accounts payable parameters (to enable matching), the invoice matching workflow (to define the approval process), and vendor tolerances (to set acceptable variances). Option A is wrong because only the workflow is insufficient without enabling matching in parameters and setting tolerances. Option B is wrong because only accounts payable parameters are insufficient without the workflow and tolerances. Option D is wrong because only vendor tolerances are insufficient without the parameters and workflow.

Answer

Only the invoice matching workflow

Answer

Only accounts payable parameters for invoice matching

Answer

Only vendor tolerances for matching

Question 9

A company using Dynamics 365 Finance needs to generate financial statements in a specific format required by local regulators. Which tool should they use?

Accepted Answer

Financial reporting (Management Reporter). Financial reporting (Management Reporter) is the dedicated Dynamics 365 Finance tool for designing and generating formatted financial statements — balance sheets, income statements, cash flow statements — that comply with specific regulatory layouts. It supports row/column/tree definitions and can output to formats regulators accept. Power BI, GL inquiry, and Excel export cannot produce the governed, repeatable regulatory statement formats that Financial reporting provides.

Answer

Power BI dashboards

Answer

General ledger inquiry

Answer

Excel export and manual formatting

Question 10

A company wants to use Dynamics 365 Finance to manage its cash flow by forecasting future bank balances. Which module should they use?

Accepted Answer

Cash and bank management. The Cash and bank management module in Dynamics 365 Finance is specifically designed to manage bank accounts, reconcile bank statements, and forecast future bank balances. It includes cash flow forecasting tools that project future cash positions based on expected receipts, payments, and other cash transactions. This is the correct module for forecasting future bank balances.

Answer

Accounts receivable

Answer

Accounts payable

Answer

General ledger

Question 11

A company using Dynamics 365 Finance notices that some purchase orders are being created with incorrect tax codes. The tax codes are determined by the vendor and item. What should they configure to enforce correct tax codes?

Accepted Answer

Assign appropriate Sales tax groups and Item sales tax groups. In Dynamics 365 Finance, tax codes are applied to transactions based on the combination of the Sales tax group (typically tied to the customer or vendor) and the Item sales tax group (tied to the item or category). Configuring these groups correctly ensures the right tax codes are applied automatically to purchase orders based on vendor and item.

Answer

Set up tax authorities and reporting codes

Answer

Define tax codes for each vendor and each item

Answer

Configure tax exemption numbers for vendors

Question 12

A company is implementing Dynamics 365 Finance and needs to configure the chart of accounts. Which TWO statements are true about the chart of accounts?

Accepted Answer

The chart of accounts can be shared across multiple legal entities.. Option A is correct because in Dynamics 365 Finance a single chart of accounts can be shared by multiple legal entities, allowing a common set of main accounts to be maintained centrally while each legal entity keeps its own ledger and accounting currency. Option E is correct because the chart of accounts is precisely the container that defines the list of main accounts available for posting in the general ledger, with each main account carrying properties such as account type, category, and posting type. Option B is not correct because account structures, not the chart of accounts itself, define the valid main account and financial dimension combinations; account structures are separate components that reference the chart of accounts. Option C is not correct because a main account cannot be deleted once it has posted transactions or balances; it can only be blocked or made inactive. Option D is not correct because the chart of accounts does not have to be unique per legal entity — sharing one chart of accounts across legal entities is a supported and common design.

Answer

The chart of accounts includes account structures that define valid dimension combinations.

Answer

Main accounts can be deleted even if they have posted transactions.

Answer

The chart of accounts must be unique for each legal entity.

Question 13

Which TWO features are part of Dynamics 365 Finance for managing accounts payable?

Accepted Answer

Vendor invoice automation. Vendor invoice automation (B) is a core Accounts Payable capability in Dynamics 365 Finance: it uses the Vendor invoice automation workspace, invoice matching (two-way/three-way), workflow, and posting to process vendor invoices with minimal manual intervention. Payment proposals (C) are also part of Accounts Payable: the Payment proposal / Payment journal functionality lets you generate vendor payments by criteria such as due date, cash discount, and payment method, then review and post them. Billing schedules (A) belong to Accounts Receivable free text invoice or project billing functionality, not AP invoice management. Fixed asset depreciation (D) is handled in the Fixed assets module, and collection letters (E) are an Accounts Receivable feature for customer collections, so neither belongs to AP.

Answer

Billing schedules

Answer

Fixed asset depreciation

Answer

Collection letters

Question 14

You are the finance system administrator for Contoso Ltd., a global manufacturing company with legal entities in the United States, Germany, and Japan. Each entity uses Dynamics 365 Finance and has its own chart of accounts due to local reporting requirements. The CFO wants to consolidate the financial results of all entities into a single consolidated report at the end of each month. Currently, the consolidation is done manually by exporting data to Excel, which is error-prone and time-consuming. The CFO wants to use the consolidation functionality within Dynamics 365 Finance. Additionally, intercompany transactions between entities are significant, and the CFO wants to automate the elimination of these transactions during consolidation. You need to design a solution that meets the following requirements:
- Use the Dynamics 365 Finance consolidation module.
- Automate the elimination of intercompany transactions.
- Allow each entity to maintain its own chart of accounts.
- Generate consolidated financial statements in the US GAAP format.

What should you do?

Accepted Answer

Create a separate consolidation legal entity, set up consolidation groups and accounts to map the different charts, and configure intercompany elimination rules.. Dynamics 365 Finance consolidation requires a dedicated consolidation legal entity where you define consolidation groups, map each subsidiary's chart of accounts to the consolidation chart via consolidation accounts, and configure intercompany elimination rules. This preserves each entity's local chart of accounts while producing a unified consolidated report in the required format (US GAAP).

Answer

Define the same chart of accounts in all legal entities and then use the consolidation online functionality to consolidate.

Answer

Set up the German and Japanese entities as child companies under the US entity, and then run consolidation.

Answer

Use Power BI to connect to each legal entity's data and create consolidated reports with calculated columns to eliminate intercompany transactions.

Question 15

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.