MB-920 Describe Dynamics 365 Finance Practice Test 2 — 15 Questions

Question 1

Refer to the exhibit. The budget control configuration shows that budget checks are enabled for purchase orders and vendor invoices. A purchase order is created for a budget amount that is 90% of the available budget. What happens during budget checking?

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

Accepted Answer

A warning is displayed but the purchase order can be posted.. The budget control configuration includes a warning threshold (e.g., 80%), and since the purchase order uses 90% of the available budget, it exceeds the warning threshold but not the error threshold (100%), so a warning is displayed but the purchase order can still be posted. Option A is incorrect because the purchase order is not blocked unless it exceeds the error threshold. Option B is incorrect because budget overrun (exceeding 100%) does not occur. Option C is incorrect because purchase orders are configured for budget checking as shown in the exhibit.

Answer

The purchase order is blocked from posting.

Answer

The purchase order is allowed and budget is overrun.

Answer

The budget check is skipped because purchase orders are not configured.

Question 2

Refer to the exhibit. A company in Germany configures electronic reporting to generate ISO 20022 credit transfer payment files. The finance team reports that the generated file fails validation by the bank. What is the most likely cause?

Accepted Answer

The country context is set incorrectly for the bank's requirements.. Electronic reporting (ER) in Dynamics 365 Finance uses a country/region context to select the correct ISO 20022 variant and bank-specific validation rules. Germany's Deutsche Bundesbank and many EU banks require the 'DE' country context (or a specific bank-specific context like 'DE_ISO20022') to generate a file that passes validation. If the country context is set to a different locale (e.g., 'US' or left blank), the generated XML will use the wrong namespace, address format, or clearing system codes, causing the bank's validation to fail.

Answer

The model mapping is missing required fields.

Answer

The format name is incorrect for credit transfers.

Answer

The version number is outdated.

Question 3

Refer to the exhibit. A user tries to post a journal with the account string 1234567-IT-CC001. The general ledger account structure requires main account (7 characters), department (3 characters), and cost center (4 characters). The system rejects the entry. What is the most likely reason?

Accepted Answer

The department segment length is incorrect.. The account string 1234567-IT-CC001 is parsed as: main account '1234567' (7 characters, correct), department 'IT' (2 characters, but required 3), and cost center 'CC001' (5 characters, but required 4). The system rejects the entry because the department segment 'IT' does not meet the required length of 3 characters. Although the cost center length is also incorrect, the question asks for the most likely reason, and the department is the first segment that fails validation when parsing left to right.

Answer

The cost center segment length is incorrect.

Answer

The main account segment length is incorrect.

Answer

The department value does not exist in the dimension values.

Question 4

An organization wants to automate the process of reconciling bank transactions with entries in Dynamics 365 Finance. Which feature should be used?

Accepted Answer

Bank reconciliation. Advanced bank reconciliation in Dynamics 365 Finance is the feature specifically designed to automate matching of bank statement lines against ledger bank transactions. It imports bank statements (via MT940, BAI2, ISO 20022 camt.053, etc.), applies matching rules, and lets users resolve unmatched items through reconciliation journals. This is the intended tool for automating the reconciliation process rather than performing it manually.

Answer

Cash and bank management

Answer

Advanced bank reconciliation

Answer

Payment journal

Question 5

Refer to the exhibit. A company has configured the General ledger parameters as shown. A user attempts to post a purchase order that exceeds the remaining budget for the current fiscal year. What will happen?

Accepted Answer

The purchase order will be blocked and an error message will appear.. When budget control is enabled in Dynamics 365 Finance General ledger parameters with the appropriate budget control configuration, any document that would exceed the remaining budget is blocked at posting time and the user receives an error message. The system prevents the transaction from being committed because it violates the configured budget check. This is the default behavior when budget control is active and no override or warning-only setting is applied.

Answer

The purchase order will be posted and the budget will be adjusted automatically.

Answer

The purchase order will be placed on hold for manager approval.

Answer

The purchase order will be posted successfully but with a warning.

Question 6

Refer to the exhibit. A Dynamics 365 Finance system has a vendor invoice workflow configured as shown. A vendor invoice with an amount of $15,000 is submitted. Who will be required to approve the invoice?

Accepted Answer

First the manager, then the director. In a Dynamics 365 Finance vendor invoice workflow, approval tasks are executed sequentially according to the workflow hierarchy. The workflow is configured so that the manager is the first approver, and upon the manager's approval, the invoice is routed to the director for final approval. Therefore, the correct sequence is manager first, then director.

Answer

First the director, then the manager

Answer

Only the manager

Answer

Only the director

Question 7

Refer to the exhibit. An organization in Dynamics 365 Finance has defined financial dimensions as shown. What is the total length of the account structure for a journal entry?

Accepted Answer

14. The total length of an account structure in Dynamics 365 Finance is the sum of the lengths of the main account and all financial dimensions included in the structure. Based on the exhibit, the dimensions and main account combine to a total of 14 characters, which is the maximum allowed for the account structure. This total must not exceed the 20-character limit imposed by Dynamics 365 Finance.

Answer

15

Answer

11

Answer

8

Question 8

Which THREE components are essential for setting up intercompany accounting in Dynamics 365 Finance? (Choose three.)

Accepted Answer

Intercompany relationships.. Intercompany relationships (B) are essential because they define the trading partners—the pairs of legal entities that are authorized to post transactions to each other—and they must be configured before any intercompany activity can occur. Intercompany journals (E) are required as the mechanism for recording the actual intercompany transactions, such as intercompany sales orders, purchase orders, and general journal entries, which flow between the related legal entities. Intercompany settlement (D) is also essential because it handles the matching and offsetting of intercompany receivables and payables between the paired legal entities, ensuring the reciprocal entries are balanced and reconciled. Budget control rules (A) are not required for intercompany setup—they are an optional budgeting feature used to enforce spending limits, unrelated to the core intercompany configuration. Vendor groups (C) are not essential either; while vendor groups are used to classify vendors for posting and payment purposes, intercompany trading partners are established through intercompany relationships rather than vendor group configuration.

Answer

Budget control rules.

Answer

Vendor groups.

Question 9

Which TWO account types are commonly used in the chart of accounts in Dynamics 365 Finance? (Choose two.)

Accepted Answer

Profit and loss accounts.. In Dynamics 365 Finance, the chart of accounts is structured around main account types, and the two fundamental categories commonly used are profit and loss accounts (C) and balance sheet accounts (D). Profit and loss accounts (C) capture revenue and expense transactions that roll up into the income statement, while balance sheet accounts (D) hold asset, liability, and equity balances reported on the balance sheet. These two types correspond directly to the main account types available when creating accounts in the chart of accounts. Statistical accounts (A) are a separate main account type used for non-financial tracking and are not one of the two commonly cited financial statement categories. Budget accounts (B) relate to budgeting configurations rather than being a primary chart of accounts account type, and reporting accounts (E) are not a standard chart of accounts account type in Dynamics 365 Finance.

Answer

Statistical accounts.

Answer

Budget accounts.

Answer

Reporting accounts.

Question 10

A manufacturing company uses Dynamics 365 Finance and wants to automate the recognition of revenue for long-term contracts. Which module should they configure?

Accepted Answer

Revenue recognition. The Revenue recognition module in Dynamics 365 Finance is specifically designed for automating revenue recognition under standards like ASC 606 and IFRS 15. Option A is incorrect because Project management and accounting handles project-based costing but not revenue recognition by default. Option C is incorrect because Accounts receivable manages invoices and payments. Option D is incorrect because General ledger is the core accounting but lacks specialized revenue recognition features.

Answer

Project management and accounting

Answer

Accounts receivable

Answer

General ledger

Question 11

A company uses Dynamics 365 Finance and wants to automatically post vendor invoices from a purchase order receipt. Which process should be configured?

Accepted Answer

Accounts payable parameters with automatic posting. Accounts payable parameters with automatic posting. In Dynamics 365 Finance, the automatic posting of vendor invoices from a purchase order receipt is controlled by the Accounts payable parameters. Specifically, on the Invoice tab of the Accounts payable parameters form, you can enable the 'Post invoice automatically' option, which allows the system to automatically post invoices that are generated from product receipts. This setting is essential for streamlining the invoice posting process when invoices are matched to purchase order receipts.

Answer

Vendor invoice policy

Answer

Invoice matching validation

Answer

Purchase order approval workflow

Question 12

A company uses Dynamics 365 Finance and needs to ensure that intercompany transactions are eliminated during consolidation. What must be set up?

Accepted Answer

Intercompany elimination rules. Intercompany elimination rules in Dynamics 365 Finance are specifically designed to automatically eliminate intercompany transactions during consolidation. Option A is incorrect because financial dimensions are used for reporting and analysis, not for eliminating transactions. Option B is incorrect because consolidation groups are used to group legal entities for consolidation, not to eliminate intercompany transactions. Option D is incorrect because intercompany accounting processes intercompany transactions but does not automatically eliminate them during consolidation.

Answer

Financial dimensions for intercompany

Answer

Consolidation groups

Answer

Intercompany accounting

Question 13

Which THREE modules are part of Dynamics 365 Finance?

Accepted Answer

Budgeting. In Dynamics 365 Finance, Budgeting (B) is a core module that provides budget planning, budget control, and budget register entries for managing organizational spending. General ledger (C) is the central module that holds the chart of accounts, financial dimensions, journals, and period close processes for all financial transactions. Accounts payable (D) is a core Finance module handling vendor invoices, payments, and settlement of liabilities to suppliers. Human resources (A) is not part of Dynamics 365 Finance; it is a separate Dynamics 365 Human Resources application (or an integrated module in some suites), and Project management and accounting (E) is not a standalone Finance module in the same sense—project accounting capabilities are provided through Project operations and related apps rather than as one of the three core Finance modules listed here.

Answer

Human resources

Answer

Project management and accounting

Question 14

Which TWO configurations are required to enable intercompany accounting in Dynamics 365 Finance?

Accepted Answer

Intercompany accounting sequences. Option A, Intercompany accounting sequences, is correct because Dynamics 365 Finance requires you to set up intercompany accounting sequences that define the source legal entity, the transaction type (such as sales order, purchase order, or journal), and the corresponding due-to/due-from posting accounts and offset accounts used to automatically generate the balancing intercompany entries. Option B, Intercompany partner definition, is correct because each legal entity must be enabled as an intercompany partner (via the Intercompany setup page) and the relationship between the originating and destination legal entities must be defined so that transactions can be posted across companies. Option C is not required because intercompany accounting works across legal entities that may use different chart of accounts structures, as long as account mapping is configured; a shared chart of accounts is not mandatory. Option D is not required because currency revaluation rules address foreign currency gain/loss adjustments and are unrelated to enabling intercompany posting. Option E is not required because budget control configuration governs budget checking and encumbrances, not the core setup needed to enable intercompany accounting.

Answer

Shared chart of accounts across legal entities

Answer

Currency revaluation rules

Answer

Budget control configuration

Question 15

Refer to the exhibit. A Dynamics 365 Finance administrator runs the PowerShell command shown. What is the expected output?

Accepted Answer

A list of configuration parameters for the General ledger module. The command retrieves configuration parameters for the General ledger module, specifically the "Ledger" configuration. Option A is wrong because it retrieves a single setting, not all. Option C is wrong because it doesn't return module list. Option D is wrong because it doesn't run diagnostics.

Answer

The current value of the Ledger configuration setting

Answer

A list of all modules in Dynamics 365 Finance

Answer

An error because the command is invalid