MB-920 Describe Dynamics 365 Finance Practice Test 24 — 15 Questions

Question 1

A multinational corporation uses Dynamics 365 Finance across multiple legal entities. The finance team needs to consolidate financial data from all entities into a single consolidated legal entity for reporting. They want to ensure that intercompany transactions are automatically eliminated during consolidation. Which feature should they configure to achieve this?

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

Accepted Answer

Intercompany accounting with automatic elimination rules. Intercompany accounting with elimination rules is the correct feature because it automatically identifies and removes reciprocal transactions between legal entities during consolidation. This ensures the consolidated financial statements reflect only external transactions. Other options like dimensions or shared charts of accounts support reporting but lack the elimination logic necessary for accurate consolidation.

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Chart of accounts with shared account structures

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Accounts payable and accounts receivable netting

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Financial dimensions with custom validation

Question 2

A company is implementing Dynamics 365 Finance and needs to record transactions for multiple legal entities while maintaining a single, shared set of main accounts for reporting. What should the company configure to meet this requirement?

Accepted Answer

A chart of accounts shared across legal entities. A shared chart of accounts in Dynamics 365 Finance enables multiple legal entities to use the same main accounts, which simplifies financial reporting and consolidation. Each legal entity can still have its own account structures, currencies, and calendars. This is the standard approach for organizations that need consistent account numbering and centralized reporting across legal entities.

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A chart of accounts that is copied to each legal entity after creation

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A single legal entity with multiple divisions

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Separate charts of accounts for each legal entity, linked by a consolidation account

Question 3

A company is setting up Dynamics 365 Finance. They need to configure the system to support multiple legal entities that share a common chart of accounts but have different financial dimension requirements. Which two features should the consultant configure to meet these requirements? (Choose two.)

Accepted Answer

Chart of accounts. To share a common chart of accounts across multiple legal entities, you configure a single chart of accounts and assign it to each legal entity. To enforce different financial dimension requirements, you configure account structures per legal entity. Account structures define which dimensions are required for each main account, allowing different legal entities to have different dimension requirements while using the same chart of accounts.

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Dimension value translations

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Financial dimension sets

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Ledger calendars

Question 4

A company uses Dynamics 365 Finance and needs to allocate rent expense across three departments based on square footage. The allocation must be recalculated automatically each month when the ledger is updated. Which feature should be configured?

Accepted Answer

Ledger allocation rules. Ledger allocation rules can distribute a source amount to destination accounts and dimensions using a defined basis and can be scheduled to run periodically. This matches the need to split rent expense across departments monthly based on square footage. Financial dimensions, accrual schemes, and budget control serve other purposes such as tagging, timing, and spending limits.

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Financial dimensions

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Budget control configurations

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Accrual schemes

Question 5

A company is implementing Dynamics 365 Finance. The controller wants to ensure that every financial transaction is recorded in a legal entity and that the chart of accounts is shared across all legal entities. Which configuration should the controller use?

Accepted Answer

Use a shared chart of accounts across all legal entities.. A shared chart of accounts in Dynamics 365 Finance enables multiple legal entities to use the same account definitions, ensuring consistency and reducing maintenance. The controller's requirement to record every transaction in a legal entity is met because each transaction is posted within a legal entity. Sharing the chart of accounts across legal entities is a standard configuration for organizations with multiple legal entities.

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Create a separate chart of accounts for each legal entity.

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Set up multiple charts of accounts and link them through consolidation accounts.

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Configure a single legal entity and use departments as separate entities.

Question 6

A company using Dynamics 365 Finance wants to streamline the month-end close process by automating the creation of recurring journal entries for rent expense of $5,000 on the first day of each month for the next year. What should they configure?

Accepted Answer

Set up a recurring journal with a template and assign a recurrence pattern.. Recurring journals are designed to automate repetitive journal entries. By setting up a template with the rent expense details and assigning a monthly recurrence pattern, the system will automatically create the journal entries on the specified schedule. This saves time and reduces errors during month-end close.

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Create a ledger accrual scheme with a monthly frequency.

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Create a periodic journal with a recurring frequency.

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Configure an allocation journal to distribute rent expense monthly.

Question 7

A company uses Dynamics 365 Finance and has a legal entity in the United States and another in France. The controller needs to record a single journal entry that affects both legal entities and automatically posts the corresponding due-to and due-from entries. Which feature should be used?

Accepted Answer

Intercompany accounting. Intercompany accounting enables a single journal entry to affect multiple legal entities and automatically generates due-to and due-from entries in each company. This ensures the intercompany balances reconcile without manual mirror postings. Advanced ledger entries, consolidation accounts, and financial dimensions do not provide cross-entity posting with automatic intercompany offsets.

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Advanced ledger entries

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Financial dimensions

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Consolidation accounts

Question 8

A company uses Dynamics 365 Finance. The accounting manager needs to ensure that when a purchase order is created for a specific department, the system automatically validates that the department has sufficient budget. The company wants to prevent purchase orders from being approved if budget funds are insufficient. Which feature should the manager configure?

Accepted Answer

Budget control. Budget control is the feature in Dynamics 365 Finance that enforces budget availability checks on source documents like purchase orders. It can be configured to check funds at various points, such as on entry or on approval, and can prevent transactions that exceed the budget. This ensures that only purchase orders with sufficient budget are processed, meeting the manager's requirement.

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Budget planning

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Budget register entries

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Commitment accounting

Question 9

A Dynamics 365 Finance user needs to record a transaction that will decrease the company's cash account and increase an expense account. Which type of journal should the user create?

Accepted Answer

General journal. A general journal is the appropriate choice because it supports manual entry of financial transactions to any main account, including cash and expense accounts. Other journal types are specialized for specific processes like vendor payments, customer payments, or inventory adjustments, and would not correctly record the described transaction.

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Customer payment journal

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Vendor payment journal

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Inventory journal

Question 10

A company uses Dynamics 365 Finance. The finance team needs to perform period-end close activities. Which TWO tasks can be performed by using the Financial period close workspace? (Choose two.)

Accepted Answer

Define and track close tasks across legal entities. The Financial period close workspace is designed to define, assign, and track period-end close tasks, including their dependencies, across legal entities. It provides visibility into task status and helps coordinate the close process. It does not automatically post invoices, generate statutory statements, or recalculate inventory costs, as those are handled by other modules or reporting tools.

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Generate statutory financial statements for tax authorities

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Recalculate inventory cost valuations for the period

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Automatically post all pending vendor invoices

Question 11

A company uses Dynamics 365 Finance with budget control enabled at the legal entity level. The budget manager reports that a purchase order was created and confirmed, but the budget check did not reduce the available budget for the specified budget account. The budget control configuration is active, and the purchase order line has a valid budget account. What is the most likely cause of the budget not being consumed?

Accepted Answer

The budget control rule for purchase orders is not enabled or the budget check is bypassed. The most likely cause is that the budget control rule for purchase orders is not enabled or the budget check is bypassed. Even with legal entity-level budget control active, each document type must have a budget control rule configured to trigger budget checks. If the rule is missing or set to not check, the purchase order will not consume budget, explaining the manager's observation.

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The purchase order was created in a different legal entity than the budget

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The budget account is not included in the budget register entry

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The budget control interval is set to 'Fiscal year' instead of 'Fiscal period'

Question 12

A company uses Dynamics 365 Finance. The finance team needs to generate financial reports that show the organization's financial position and performance. They want to use the default financial reporting tools available in Dynamics 365 Finance. Which two statements are true about Financial reporting in Dynamics 365 Finance? (Choose two.)

Accepted Answer

Financial reporting uses row definitions, column definitions, and reporting trees to build reports.. Financial reporting in Dynamics 365 Finance is a powerful tool that uses building blocks to create customizable financial statements. It supports multiple legal entities through reporting trees and does not require a separate SSRS server. The two true statements are that it uses row definitions, column definitions, and reporting trees, and that it can combine data from multiple legal entities.

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Financial reporting can only be used with the default chart of accounts and cannot be customized.

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Financial reporting automatically generates reports in real time without any user configuration.

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Financial reporting requires a separate SQL Server Reporting Services (SSRS) server to generate reports.

Question 13

A company uses Dynamics 365 Finance with the Cost accounting module. The cost accountant needs to allocate indirect costs, such as factory rent, to multiple production departments based on the square footage each department occupies. The allocation must be recalculated each month. What should the accountant configure?

Accepted Answer

A cost allocation policy with a statistical dimension for square footage and an allocation base that uses the statistical measure.. Cost allocation policies with statistical dimensions enable dynamic allocation of indirect costs based on a measurable driver like square footage. This ensures that each month the rent is distributed accurately according to current space usage, without manual intervention. Other options either do not allocate costs or rely on static percentages that would require constant updates.

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A cost center hierarchy that includes all production departments and a cost roll-up policy.

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A ledger allocation rule with a basis of 'Percentage' and manually entered percentages for each department.

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A budget control rule that distributes the rent expense across departments based on a fixed percentage.

Question 14

A company is implementing Dynamics 365 Finance and needs to configure the general ledger to support multiple legal entities. The finance team wants to ensure that the chart of accounts is consistent across entities while allowing some flexibility for local reporting requirements. Which two features should they configure to achieve this? (Choose two.)

Accepted Answer

Shared chart of accounts across legal entities. A shared chart of accounts ensures consistency across legal entities, while financial dimensions with entity-specific hierarchies provide the flexibility needed for local reporting. Together, they allow the finance team to maintain a uniform account structure and adapt reporting to each entity's requirements, meeting both consistency and flexibility goals without duplicating the chart.

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Separate chart of accounts for each legal entity

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Consolidation accounts with automatic elimination

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Account structures that restrict main account usage per entity

Question 15

A Dynamics 365 Finance user needs to create a purchase order and ensure that the system checks whether the purchase will exceed the available budget for the cost center. The budget control configuration is already enabled for the cost center dimension. What must the user do to enforce the budget check on the purchase order?

Accepted Answer

Ensure that the purchase order's accounting distributions include the cost center dimension and that budget control is configured for that dimension.. Budget control in Dynamics 365 Finance is automatically applied when the accounting distributions include dimensions that are configured for budget control. Therefore, the user must ensure the cost center dimension is on the purchase order distributions and that budget control rules cover it. No manual toggle on the order or additional budget entry is needed.

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Create a budget register entry for the purchase order amount before submitting the purchase order.

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Enable the 'Budget control' parameter in the Procurement and sourcing parameters form.

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Set the 'Budget control' option to 'Yes' on the purchase order header.