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

Question 1

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 for capturing invoice data, 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 used for predicting cash positions, not generating payments.

Answer

Cash flow forecasting

Answer

Purchase agreements

Answer

Vendor invoice capture

Question 2

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 inventory posting profiles. Inventory posting profiles determine how inventory transactions are posted to the general ledger. If they are not correctly set up, posting may fail or update the wrong accounts. Option B is wrong because audit policies review transactions after posting and do not affect the general ledger update process itself. Option C is wrong because budget control settings prevent posting when budget is exceeded, but the issue described is intermittent and not specifically related to budget constraints. Option D is wrong because payment schedules affect payment timing, not the posting of purchase invoices to the general ledger.

Answer

Improperly configured audit policies

Answer

Budget control settings are too restrictive

Answer

Incorrect payment schedule setup

Question 3

You are the finance controller at Contoso Ltd., a service company that uses Dynamics 365 Finance for project accounting. The company has multiple ongoing projects, each with a budget. The project managers need to track actual costs against budget in real time. They also need to be able to forecast future costs and revenue for each project. The CFO wants to use the Project budget feature to control costs. You need to configure the system to meet these requirements. What should you do?

Accepted Answer

Set up project budgets with budget control, and use project forecasts to predict future costs and revenue.. Project budgets with budget control allow tracking actual costs against budget in real time, and project forecasts enable prediction of future costs and revenue. Option A is incorrect because while creating project budgets with budget control tracks costs, using expense journals does not provide the forecasting capability needed. Option B is incorrect because fixed-price projects are not suitable for flexible forecasting; they have a predetermined total price, not ongoing cost forecasting. Option D is incorrect because work breakdown structures are for task management, not for budget control or forecasting.

Answer

Create project budgets using the project budget control feature, and use expense journals to post costs.

Answer

Set up each project as a fixed-price project and use the project budget control feature to track costs.

Answer

Create a work breakdown structure for each project and use the project budget control feature to monitor costs.

Question 4

A company is implementing Dynamics 365 Finance and needs to configure a chart of accounts that supports multiple legal entities with different fiscal requirements. Which structure should be used?

Accepted Answer

Use a shared chart of accounts with separate fiscal calendars per legal entity.. A shared chart of accounts is the recommended approach in Dynamics 365 Finance when multiple legal entities must operate under different fiscal requirements. By sharing the chart of accounts but assigning separate fiscal calendars per legal entity, the organization maintains a consistent account structure across entities while allowing each entity to comply with its own fiscal year, period definitions, and closing schedules. This balances standardization with regulatory flexibility.

Answer

Use a single shared chart of accounts with one shared fiscal calendar.

Answer

Use main accounts only without dimensions.

Answer

Create a separate chart of accounts for each legal entity.

Question 5

A company uses Dynamics 365 Finance and needs to create a vendor payment that includes a discount of $50 if paid within 10 days. The invoice is for $1,000. The payment is made on day 8. What should the payment amount be?

Accepted Answer

$950. The vendor payment is made within the 10-day discount period, so the $50 discount applies to the $1,000 invoice. The payment amount is $1,000 - $50 = $950. In Dynamics 365 Finance, this is handled through the cash discount setup on the vendor payment terms, which automatically calculates the discounted amount when the payment date falls within the discount window.

Answer

$1,000

Answer

$900

Answer

$1,050

Question 6

A company is implementing Dynamics 365 Finance and needs to automate the reconciliation of bank transactions. Which feature should be used to match bank statement lines with open bank document lines based on rules?

Accepted Answer

Advanced bank reconciliation. Advanced bank reconciliation in Dynamics 365 Finance allows you to import bank statement lines and automatically match them to open bank document lines (such as checks, deposits, and transfers) using user-defined matching rules. This feature supports rule-based matching (e.g., by amount, date, or reference) and handles complex scenarios like partial matches or tolerance thresholds, making it the correct choice for automating bank transaction reconciliation.

Answer

Bank account reconciliation

Answer

Payment proposal

Answer

Automatic settlement

Question 7

A company needs to ensure that purchase orders cannot be created without an approved vendor. Which configuration should be used?

Accepted Answer

Set 'Require approval for vendor' to Yes in Procurement and sourcing parameters. Setting 'Require approval for vendor' to Yes in Procurement and sourcing parameters ensures that a purchase order cannot be created unless the vendor is in an approved status. This configuration enforces a prerequisite check at the time of purchase order creation, preventing unapproved vendors from being used.

Answer

Create a purchase order approval workflow

Answer

Enable 'Invoice matching validation'

Answer

Set vendor status to Active

Question 8

A company uses Dynamics 365 Finance. The CFO wants to analyze actuals vs budget across multiple departments and cost centers. Which THREE components must be set up?

Accepted Answer

Budget model. The budget model is a required component because it defines the structure for how budget data is organized and calculated, such as by department or cost center. Without a budget model, the system cannot aggregate or compare actuals against budgeted amounts across different financial dimensions. It serves as the foundational framework for budget planning and analysis.

Answer

Budget control configuration

Answer

Budget register entries

Question 9

A company is configuring fixed assets in Dynamics 365 Finance. They need to ensure that asset depreciation is calculated differently for tax reporting and financial reporting. Which TWO actions must be taken?

Accepted Answer

Create multiple value models for the same asset.. In Dynamics 365 Finance, to calculate depreciation differently for tax and financial reporting, you must create multiple value models for the same asset. Each value model can then be assigned a separate depreciation profile, allowing distinct depreciation calculations for each reporting purpose.

Answer

Use a single depreciation book for both tax and financial.

Answer

Enable the 'Derived value models' feature.

Answer

Use a single value model with multiple depreciation profiles.

Question 10

You are the Dynamics 365 Finance administrator for a manufacturing company with multiple legal entities. The company uses intercompany transactions between Entity A (US) and Entity B (Germany). Entity A sells raw materials to Entity B. The transactions must be recorded in both entities' ledgers, and the intracompany trade must be eliminated during consolidation. Recently, the accounting team reported that intercompany transactions are not being eliminated correctly. Upon investigation, you find that the intercompany transactions were posted using separate purchase orders and sales orders, not through the intercompany module. The elimination process uses intercompany eliminations rules. What should you do to ensure proper elimination?

Accepted Answer

Recreate the transactions using the intercompany module and delete the original orders.. The intercompany module in Dynamics 365 Finance is specifically designed to automatically generate matching transactions in both legal entities and to flag those transactions for elimination during consolidation. By recreating the transactions through the intercompany module, you ensure that the intercompany eliminations rules can correctly identify and eliminate the intercompany trade. Deleting the original orders removes the manually created purchase and sales orders that were not linked to the elimination process.

Answer

Reverse the existing transactions and repost them with the same method.

Answer

Create manual elimination journal entries to correct the balances.

Answer

Adjust the elimination rules to match the existing transactions.

Question 11

A manufacturing company is implementing Dynamics 365 Finance and wants to streamline its procure-to-pay process. They need to automatically generate purchase orders when inventory falls below a predefined level. Which feature should they configure?

Accepted Answer

Set up reorder point planning and coverage groups. Reorder point planning and coverage groups in Dynamics 365 Finance automatically generate planned purchase orders when inventory falls to the reorder point. Option A is incorrect because procurement catalogs with punch-out to vendor are for indirect procurement, not automated inventory replenishment. Option B is incorrect because purchase requisition workflow with auto-release requires manual initiation and approval, not automatic generation based on inventory levels. Option D is incorrect because vendor collaboration facilitates communication with suppliers but does not automatically create purchase orders.

Answer

Use procurement catalogs with punch-out to vendor

Answer

Configure purchase requisition workflow with auto-release

Answer

Enable vendor collaboration for automatic ordering

Question 12

Drag and drop the steps to create a new customer record in Dynamics 365 Sales in the correct order.

Accepted Answer

Step 1: Open Dynamics 365 Sales app, Step 2: Navigate to customer list, Step 3: Click New to create a new customer record, Step 4: Fill in required fields, Step 5: Save the record.. Creating a customer record starts with opening the app, then navigating to the customer list, creating a new record, filling in details, and saving.

Answer

Step 1: Open Dynamics 365 Sales app, Step 2: Navigate to customer list, Step 3: Click New to create a new customer record, Step 4: Save the record, Step 5: Fill in required fields.

Answer

Step 1: Open Dynamics 365 Sales app, Step 2: Click New to create a new customer record, Step 3: Navigate to customer list, Step 4: Fill in required fields, Step 5: Save the record.

Answer

Step 1: Navigate to customer list, Step 2: Open Dynamics 365 Sales app, Step 3: Click New to create a new customer record, Step 4: Fill in required fields, Step 5: Save the record.

Question 13

Drag and drop the steps to set up a new user in Dynamics 365 Finance and Operations in the correct order.

Accepted Answer

Create user record, then enter user details, then assign security roles, then enable user.. User setup includes creating the user, entering details, assigning roles, and enabling.

Answer

Create user record, then assign security roles, then enter user details, then enable user.

Answer

Create user record, then enter user details, then enable user, then assign security roles.

Answer

Enter user details, then create user record, then assign security roles, then enable user.

Question 14

Match each Dynamics 365 Finance module to its primary function.

Accepted Answer

General ledger: Records all financial transactions and provides a complete audit trail. The correct matches are: General ledger (records transactions), Accounts payable (vendor invoices), Accounts receivable (customer invoices), and Fixed assets (asset lifecycle). Distractors swap definitions between General ledger and Accounts payable.

Answer

General ledger: Manages customer invoices and payments

Answer

Accounts payable: Records all financial transactions and audit trail

Question 15

Match each Dynamics 365 Human Resources entity to its role.

Accepted Answer

Worker: Represents an individual employed by the organization. In HR, Worker tracks individuals, Position is a specific assignment of a Job. Distractors confuse Job with location or Worker with role.

Answer

Job: A specific physical location where work is performed

Answer

Worker: A set of duties and responsibilities grouped into a role