MB-920 Describe Dynamics 365 Finance Practice Test 3 — 15 Questions

Question 1

A company uses Dynamics 365 Finance. The accounts payable manager wants to automate the process of matching purchase orders, product receipts, and vendor invoices. Which feature should they use?

Accepted Answer

Accounts payable invoice matching. Correct: Accounts payable invoice matching (option A) automates the three-way matching process among purchase orders, product receipts, and vendor invoices. Option B (Vendor collaboration) is for communication with vendors, not matching. Option C (Budget control) manages budgets. Option D (Fixed assets management) handles asset lifecycle.

Answer

Vendor collaboration

Answer

Budget control

Answer

Fixed assets management

Question 2

A multinational organization uses Dynamics 365 Finance. They need to consolidate financial data from subsidiaries that use different currencies and accounting standards. The consolidation must be performed automatically on a monthly basis. What should they configure?

Accepted Answer

Consolidation and currency translation. Correct Answer: Consolidation and currency translation. This feature automatically consolidates financial data from subsidiaries using different currencies and accounting standards into a single reporting currency, meeting the requirement for automatic monthly consolidation. Option A (Fixed assets management) manages asset lifecycle but does not handle consolidation. Option B (Intercompany accounting) records transactions between entities but does not automate multi-currency consolidation. Option C (Budget planning) is for creating budgets, not consolidation. Option D (Consolidation and currency translation) is the correct feature for this scenario.

Answer

Fixed assets management

Answer

Intercompany accounting

Answer

Budget planning

Question 3

A company is implementing Dynamics 365 Finance. They want to use AI to automatically classify vendor invoices and extract key data. Which feature should they enable?

Accepted Answer

AI Builder for invoice processing. AI Builder for invoice processing is the correct feature because it uses prebuilt AI models to automatically classify vendor invoices and extract key data such as invoice number, date, and line items directly within Dynamics 365 Finance. This capability leverages Microsoft's AI Builder, which integrates with Power Automate and Dataverse to process invoices without custom development, aligning with the requirement for AI-driven automation.

Answer

Vendor collaboration

Answer

Optical character recognition (OCR) service

Answer

Power BI reports

Question 4

A manufacturing company uses Dynamics 365 Finance. They need to track the cost of raw materials and finished goods across multiple production stages. Which costing method should they use?

Accepted Answer

Standard costing. Correct: Standard costing uses predetermined costs for materials and labor, making it suitable for tracking costs across multiple production stages in manufacturing. Option A (Moving average) calculates cost based on average cost of goods. Option B (LIFO) is an inventory valuation method that assumes last units added are sold first, but it is not designed for predetermined cost tracking across production stages. Option C (FIFO) is another inventory valuation method that assumes oldest inventory is sold first.

Answer

Moving average

Answer

Last in, first out (LIFO)

Answer

First in, first out (FIFO)

Question 5

An organization uses Dynamics 365 Finance. The finance team notices that the 'Purchase order' workflow is not triggering correctly for certain vendors. They suspect it's due to conditions in the workflow configuration. Where should they diagnose the workflow condition logic?

Accepted Answer

Purchase order workflow editor. Purchase order workflow editor. Workflow configuration, including conditions, is reviewed and edited within the workflow editor in Dynamics 365 Finance. Option A (Power Automate flows) is incorrect because Power Automate is used for external automation, not for native Dynamics 365 workflows. Option B (System administration parameters) is incorrect as it deals with system-wide settings, not specific workflow logic. Option D (Vendor master form) is incorrect because the vendor master does not contain workflow configuration details.

Answer

Power Automate flows

Answer

System administration parameters

Answer

Vendor master form

Question 6

A company uses Dynamics 365 Finance. The tax accountant needs to configure value-added tax (VAT) codes for multiple jurisdictions. Where should they set up the VAT rates?

Accepted Answer

Sales tax codes. In Dynamics 365 Finance, value-added tax (VAT) rates are configured using sales tax codes, which are set up in the Tax module, not in General ledger, Accounts payable, or Inventory management parameters. The sales tax code defines the tax rate and calculation method for each jurisdiction, and it is the standard location for VAT rate setup across all modules.

Answer

General ledger parameters

Answer

Accounts payable parameters

Answer

Inventory management parameters

Question 7

A company uses Dynamics 365 Finance. They want to enable Copilot to assist with generating financial reports and answering questions about financial data. What must be configured first?

Accepted Answer

Copilot in Dynamics 365 Finance. B is correct because Copilot in Dynamics 365 Finance must be explicitly enabled and configured as a prerequisite before it can assist with generating financial reports or answering questions about financial data. This involves turning on the Copilot feature within the environment settings and ensuring the necessary permissions and data access are in place.

Answer

Data management framework

Answer

Power BI embedded

Answer

Finance Insights module

Question 8

An organization using Dynamics 365 Finance receives an error when trying to post a vendor invoice: 'Invoice total does not match the expected amount based on the purchase order.' The purchase order has been partially received. What is the most likely cause?

Accepted Answer

The invoice quantity exceeds the received quantity. Correct: Invoice matching validates amounts against purchase order and receipts. Partial receipt causes mismatch. Option A (Invoice not approved in workflow) would not cause this error. Option B (Vendor blocked for posting) would prevent posting entirely. Option C (Invoice currency differs from PO currency) would give a different error.

Answer

The invoice is not yet approved in workflow

Answer

The vendor is blocked for posting

Answer

The invoice currency differs from the purchase order currency

Question 9

Which TWO of the following are capabilities of Dynamics 365 Finance? (Choose two.)

Accepted Answer

Fixed asset management. Correct: C and E. Fixed asset management (C) is a core module within Dynamics 365 Finance, handling asset lifecycle, depreciation, and disposal. Budget control (E) is a key feature for monitoring and enforcing budget limits. Option A (Project scheduling) belongs to Project Operations, not Finance. Option B (Marketing automation) is part of Dynamics 365 Marketing. Option D (Customer service management) is in Dynamics 365 Customer Service.

Answer

Project scheduling

Answer

Marketing automation

Answer

Customer service management

Question 10

Which THREE of the following are valid configuration options for posting profiles in Dynamics 365 Finance? (Choose three.)

Accepted Answer

Customer posting profile. The correct answers are A, C, and E. In Dynamics 365 Finance, posting profiles define how transactions from subledgers are posted to the general ledger. Customer posting profile (A) manages accounts receivable transactions, Vendor posting profile (C) manages accounts payable transactions, and Inventory posting profile (E) manages inventory transactions. Sales tax posting group (D) is a sales tax configuration, not a posting profile. Ledger posting setup (B) is a general ledger setup, not a posting profile.

Answer

Ledger posting setup

Answer

Sales tax posting group

Question 11

Refer to the exhibit. The JSON shows the configuration for a currency exchange rate in Dynamics 365 Finance. A user reports that when posting a sales invoice in EUR, the system does not automatically convert to USD using the rate shown. What is the most likely reason?

Accepted Answer

The ExchangeRateType is set to Average, which is not used for automatic conversion. The exchange rate type 'Average' is designed for reporting and is not used for automatic conversion during document posting. Dynamics 365 Finance requires a rate type such as 'Spot' or 'Daily' to trigger automatic currency conversion. Option B is incorrect because the CurrencyCode is set correctly to USD (the target currency). Option C is incorrect; a future date does not prevent the rate from being used—it would simply apply when that date becomes current. Option D is incorrect; tolerance settings control rate variance checks, not whether a rate is applied at all.

Answer

The CurrencyCode is set to USD instead of EUR

Answer

The ExchangeRateDate is in the future

Answer

The ExchangeRate is not within the allowed tolerance

Question 12

Refer to the exhibit. A user in the USMF legal entity tries to post a journal entry in the General ledger for fiscal year 2025 but receives an error. What is the most likely cause based on the exhibit?

Accepted Answer

The period status for 2025 is set to Closed. Correct: The period status for fiscal year 2025 is set to 'Closed', which prevents any new postings. Option A correctly identifies this. Option B is incorrect because the module setting does not affect journal posting in General ledger. Option C is incorrect because USMF is a valid legal entity for general ledger posting. Option D is incorrect because the fiscal calendar year 2025 is opened, but the period status itself is closed.

Answer

The module is set to GeneralLedger instead of AccountsPayable

Answer

The legal entity USMF is not configured for general ledger posting

Answer

The fiscal calendar year 2025 is not yet opened

Question 13

Refer to the exhibit. The configuration shows a budget in Dynamics 365 Finance. The budget manager wants to create a revised budget based on the original but cannot modify the existing record. What should they do?

Accepted Answer

Create a new budget scenario for the revision. Budget revisions in Dynamics 365 Finance require a new budget scenario; the existing approved record cannot be edited. Option A is incorrect because changing the budget status to Draft would not allow modification if the budget is already in a workflow that locks editing. Option B is incorrect because deleting and recreating is inefficient and loses history. Option C is incorrect because modifying the BudgetModel changes the structure, not the amounts, and may affect other budgets using that model.

Answer

Change the BudgetStatus to Draft to allow editing

Answer

Delete the existing budget and recreate it with changes

Answer

Modify the BudgetModel to include the changes

Question 14

A manufacturing company uses Dynamics 365 Finance. The finance team notices that the general ledger balances do not match the subledger details for accounts payable. What should you troubleshoot first?

Accepted Answer

Run the 'Troubleshoot GL balance' report in Accounts payable.. The correct first step is to run the 'Troubleshoot GL balance' report in Accounts payable. This report is specifically designed to identify discrepancies between the general ledger and the subledger for accounts payable. Option A is incorrect because the invoice approval workflow affects approval processes, not GL-subledger balances. Option B is incorrect because reviewing the vendor payment settlement process pertains to payments, not balance discrepancies. Option D is incorrect because re-running the payment journal report shows payment details, not balance reconciliation.

Answer

Check the invoice approval workflow configuration.

Answer

Review the vendor payment settlement process.

Answer

Re-run the payment journal report.

Question 15

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

Accepted Answer

Advanced bank reconciliation. Advanced bank reconciliation automatically matches bank transactions with general ledger entries, automating the reconciliation process. Option A is wrong because cash flow forecast is used to predict future cash flows, not reconcile transactions. Option B is wrong because budget control enforces budget limits, not reconciliation. Option C is wrong because payment proposal generates payments to vendors, not reconciles bank transactions.

Answer

Cash flow forecast

Answer

Budget control

Answer

Payment proposal