MB-920 Describe Dynamics 365 Finance Practice Test 19 — 15 Questions

Question 1

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?

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

Accepted Answer

Use the settlement functionality in the customer payment journal.. The settlement functionality in the customer payment journal is the correct feature because it allows the clerk to manually select which invoice(s) to apply the payment against, including the ability to mark the oldest invoice first. This is the standard method in Dynamics 365 Finance for applying a customer payment to specific outstanding transactions. The clerk can open the settlement form from the payment journal line and choose the invoice to settle, ensuring the payment is applied as desired.

Answer

Run the collections process to identify the oldest invoice.

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

Answer

Create a payment schedule for the customer.

Question 2

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.. Budget control in Dynamics 365 Finance only performs checks when the CheckLevel on the budget control configuration is set to something other than 'None'. If the exhibit shows CheckLevel = 'None', budget checking is effectively disabled for the affected source documents, so purchase invoices post without any budget verification.

Answer

The source document type is not supported for budget control.

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The account structure does not include any financial dimensions.

Answer

Budget control is not enabled in the system.

Question 3

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.

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Cost accounting module.

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Budget control.

Question 4

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 5

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 is specifically designed to handle complex, frequently changing tax rules across multiple jurisdictions without requiring code customization. It allows tax professionals to configure tax rates, rules, and calculation logic through a no-code interface, making it ideal for multinational compliance scenarios.

Answer

General ledger parameters.

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Electronic reporting module.

Answer

Feature management.

Question 6

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 in Dynamics 365 Finance is purpose-built to combine financial data from multiple legal entities into a single consolidated view. It allows you to define consolidation groups, select the accounts and dimensions to include, and run consolidation processes that aggregate balances across legal entities into a single consolidation legal entity. This is the standard feature for producing consolidated financial statements across a multi-entity organization.

Answer

Budget consolidation.

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Financial reporting module.

Answer

Intercompany accounting.

Question 7

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.. To automatically eliminate intercompany transactions during consolidation in Dynamics 365 Finance, you must configure elimination rules in the consolidation module. These rules define how to identify and eliminate intercompany balances and transactions, generating elimination entries automatically during the consolidation process. This ensures that the consolidated financial statements do not double-count intercompany activities.

Answer

Create manual journal entries to eliminate intercompany balances after consolidation.

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Set up intercompany accounting to post elimination entries automatically.

Answer

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

Question 8

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 purchase order workflows support configuring an alternate approver and escalation steps directly in the workflow definition. When the primary approver is unavailable, the workflow can automatically route the task to an alternate approver or escalate after a timeout, providing a built-in fallback without manual intervention. This is the correct configuration-level solution.

Answer

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

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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 9

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'.. In Dynamics 365 Finance workflow configuration, the escalation action determines what happens when the time limit expires without a response. If the escalation action is set to 'Approve' rather than 'Escalate' (or 'Reject'/'Request change'), the workflow will automatically approve the purchase order once the 48-hour time limit elapses, which explains why POs bypass the VP of Procurement entirely. The time limit itself only defines when the escalation triggers — the action defines what occurs.

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 10

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. Customer payment predictions in Dynamics 365 Finance uses AI to forecast when customers will pay invoices and provides recommendations for proactive actions, such as prioritizing collections. This directly matches the CFO's requirement to predict payment delays and suggest actions.

Answer

Cash flow forecasting

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Microsoft Copilot in Finance

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Budgeting and planning

Question 11

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 12

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 in Dynamics 365 Finance is specifically designed to plan, execute, and track project costs, revenues, and budgets. Cost categories allow you to classify expenses (e.g., labor, materials, subcontractor) against a project, and project budgets enable detailed cost control and reporting. For a construction project where tracking expenses by project is critical, this module provides the necessary structure and integration with other financial modules.

Answer

Fixed assets module with asset tracking.

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Budgeting module with budget control.

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Expense management module with expense categories.

Question 13

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. Dynamics 365 Finance includes a Cash flow forecasting feature that projects future cash positions by combining historical transaction patterns with expected customer payments, vendor invoices, and other scheduled cash movements. It uses ledger data and forecast models to produce rolling projections. This is the specific capability designed for the scenario described.

Answer

General ledger

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Bank reconciliation

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Payment schedules

Question 14

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.. Intercompany parameters in Dynamics 365 Finance include settings that control whether intercompany invoices are automatically created and posted when a purchase order is confirmed. Enabling the appropriate intercompany parameter for automatic posting on PO confirmation streamlines the intercompany invoicing process across legal entities.

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 15

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.. Option A is correct because enabling vendor collaboration in Dynamics 365 Finance lets vendors submit electronic invoices through the Vendor collaboration workspace, which are then imported into the pending vendor invoice pool and can be processed automatically, eliminating manual keying. Option C is correct because OCR (often via the Invoice capture solution or third-party OCR integration) digitizes paper invoices into structured data that flows into the pending vendor invoice list, reducing manual data entry. Option D is correct because configuring purchase order matching (two-way or three-way matching with invoice matching tolerances) allows invoices tied to purchase orders to be automatically matched and posted without manual intervention. Option B is not a reduction method—the payment journal is used to settle liabilities and record payments, not to automate vendor invoice creation. Option E is the opposite of the goal, since manually entering all invoices increases manual work rather than reducing it.

Answer

Use the payment journal to record invoices.

Answer

Manually enter all invoices to ensure accuracy.