MB-920 Describe Dynamics 365 Finance Practice Test 4 — 15 Questions

Question 1

An organization is implementing Dynamics 365 Finance and must configure a fiscal calendar that aligns with a 4-4-5 retail calendar. Which approach should they use?

Accepted Answer

Create a custom period template based on the 4-4-5 pattern.. Dynamics 365 Finance supports custom period templates like 4-4-5. Option A is wrong because fiscal year date intervals define date ranges, not period patterns. Option B is wrong because the standard calendar is 12 months and does not support a 4-4-5 pattern. Option C is wrong because the period close template manages closing processes.

Answer

Define fiscal year date intervals.

Answer

Use the standard calendar and manually adjust periods each year.

Answer

Use the period close template.

Question 2

A company uses Dynamics 365 Finance and needs to track expenses by department and project simultaneously. Which financial dimension configuration should they use?

Accepted Answer

Add Department and Project as financial dimensions to the main account.. In Dynamics 365 Finance, financial dimensions (e.g., Department and Project) are attributes attached to a main account to enable tracking by multiple dimensions simultaneously. Option A is wrong because cost centers and cost objects belong to cost accounting, not general ledger dimension tracking. Option B is wrong because main accounts and subaccounts are for chart of accounts structure, not for multi-dimensional tracking. Option C is wrong because budget codes and budget classes are used for budgeting, not for expense tracking across dimensions.

Answer

Create separate cost centers and cost objects.

Answer

Use main accounts and subaccounts.

Answer

Configure budget codes and budget classes.

Question 3

Which TWO of the following are features of Dynamics 365 Finance?

Accepted Answer

Credit and collections management. Options B and D are correct. B: Credit and collections management is a core feature of Dynamics 365 Finance, handling customer credit limits and collections processes. D: Budget planning is another core feature, enabling organizations to create and manage budgets. Options A, C, and E are incorrect: A (Power BI dashboards) is a reporting capability often integrated but not a core Finance feature; C (Warehouse management) is part of Dynamics 365 Supply Chain Management; E (Omnichannel order management) belongs to Dynamics 365 Commerce.

Answer

Power BI dashboards

Answer

Warehouse management

Answer

Omnichannel order management

Question 4

Which THREE of the following are valid configurations for intercompany accounting in Dynamics 365 Finance?

Accepted Answer

Elimination rules can be defined to automatically remove intercompany transactions during consolidation.. Options A, C, and E are correct. A: Elimination rules can be defined to automatically remove intercompany transactions during consolidation, which is a standard feature in Dynamics 365 Finance. C: Intercompany journals can be set up to post automatically to both legal entities involved, streamlining the accounting process. E: Intercompany sales orders and purchase orders can be automatically generated through intercompany workflows, reducing manual effort. Options B and D are incorrect. B: Intercompany transactions do not require the same currency; they can be in different currencies with exchange rate adjustments. D: While intercompany transactions involve multiple legal entities, they are not posted separately to a distinct legal entity for each transaction; they are posted within the same legal entity setup.

Answer

Intercompany transactions must use the same currency.

Answer

Each intercompany transaction must be posted to a separate legal entity.

Question 5

Which TWO of the following are capabilities of the General ledger in Dynamics 365 Finance?

Accepted Answer

Chart of accounts management. The General ledger in Dynamics 365 Finance is the central repository for financial data, and its core capabilities include managing the Chart of accounts (D) and supporting Multi-currency accounting (E). The Chart of accounts defines the financial structure of an organization, allowing for the creation and maintenance of main accounts, dimensions, and account structures. Multi-currency accounting enables transactions to be recorded and reported in multiple currencies, with automatic exchange rate calculations and revaluation, which is fundamental to the General ledger's role.

Answer

Asset depreciation calculation

Answer

Invoice matching

Answer

Budget cycle management

Question 6

Refer to the exhibit. A Dynamics 365 Finance system has a tax code configured as shown. A sales invoice line item has a unit price of 100.00 (excluding tax) and the tax code applies. What is the total invoice line amount including tax?

Accepted Answer

119.00. The tax code with a rate of 19% and calculation method 'WholeAmount' computes tax on the line amount and adds it: tax = 100 * 0.19 = 19, total = 119. Option A (110.00) implies a 10% tax rate, not 19%. Option B (138.00) implies a 38% tax rate, not 19%. Option C (100.00) excludes tax entirely.

Answer

110.00

Answer

138.00

Answer

100.00

Question 7

Refer to the exhibit. A fixed asset is configured as shown. What is the depreciation amount for the first year (2025) if the company uses a half-year convention?

Accepted Answer

10000.00. The asset cost is $50,000 with a 5-year useful life and 200% declining balance method with half-year convention. Straight-line rate = 1/5 = 20%. Double-declining rate = 2 × 20% = 40%. First-year depreciation with half-year convention: $50,000 × 40% × 0.5 = $10,000. Option A ($20,000) ignores the half-year convention. Option C ($12,000) is not a valid calculation. Option D ($10,000 straight-line) is incorrect because the method used is declining balance, not straight-line.

Answer

20000.00

Answer

12000.00

Answer

10000.00 (straight-line)

Question 8

Refer to the exhibit. An accounts payable invoice journal is configured as shown. A user posts an invoice for 1000.00 with vendor account V1001. Which account is credited?

Accepted Answer

Default offset account 200110. When posting an invoice using the invoice register journal, the credit is recorded to the default offset account (200110) temporarily. This is a standard behavior in Dynamics 365 Finance for invoice registers. Option A is incorrect because the vendor account is not credited until the invoice is approved and posted. Option B is incorrect because the expense account is typically debited, not credited. Option C is incorrect because there is no separate vendor balance account in this context; the vendor balance is updated later.

Answer

Vendor account V1001

Answer

Expense account

Answer

Vendor balance account

Question 9

A manufacturing company uses Dynamics 365 Finance and Supply Chain Management. The finance department wants to allocate overhead costs to production orders based on machine hours. Which costing method should they configure?

Accepted Answer

Absorption costing. Absorption costing is correct because in Dynamics 365 Finance, it allocates overhead costs to production orders using predetermined rates based on activity drivers like machine hours. Variable costing (A) only includes variable costs, ignoring fixed overhead. Standard costing (B) uses standard rates for cost elements but does not specifically allocate overhead based on machine hours. Job costing (C) tracks costs per individual job or order, not overhead allocation by machine hours.

Answer

Variable costing

Answer

Standard costing

Answer

Job costing

Question 10

A company uses Dynamics 365 Finance with multiple legal entities. The finance team needs to enforce a consistent chart of accounts across all entities. Which feature should they use?

Accepted Answer

Shared chart of accounts. A shared chart of accounts allows a single chart of accounts to be used across all legal entities, ensuring consistency. Option A is incorrect because financial dimensions are used to add additional segmentation to transactions, not to enforce a chart of accounts structure. Option B is incorrect because legal entity overrides are used to customize configurations for specific entities, not to enforce consistency. Option C is incorrect because main account categories group main accounts for reporting but do not enforce the chart of accounts across entities.

Answer

Financial dimensions

Answer

Legal entity override

Answer

Main account categories

Question 11

A company uses Dynamics 365 Finance. The accounts payable team needs to automatically calculate discounts based on payment terms when entering vendor invoices. Where should they configure the discount?

Accepted Answer

Payment terms. Cash discounts are configured at the vendor payment terms level and automatically applied during invoice entry. Option B is wrong because procurement categories are for item classification, not discounts. Option C is wrong because invoice policies are for approval, not discounts. Option D is wrong because vendor master only stores company details.

Answer

Procurement categories

Answer

Invoice policies

Answer

Vendor master

Question 12

A company uses Dynamics 365 Finance and wants to track budget funds availability before posting purchase orders. Which budget control configuration must be enabled?

Accepted Answer

Budget control. Budget control must be enabled and configured to check funds availability for purchase orders. Option A is wrong because budget plans are for planning, not control. Option B is wrong because budget register entries record budget amounts, but do not enforce control. Option D is wrong because budget models define the budget structure, not control.

Answer

Budget plan

Answer

Budget register entry

Answer

Budget model

Question 13

A company uses Dynamics 365 Finance. The finance team needs to generate financial reports that combine data from multiple legal entities into a single report. Which tool should they use?

Accepted Answer

Financial Reporting (Management Reporter). Financial Reporting (Management Reporter) is designed to combine data from multiple legal entities into a single report using row definitions and reporting trees. Option B is incorrect because General ledger inquiry displays data for only one legal entity at a time. Option C is incorrect because Power BI requires separate data integration and does not natively consolidate multiple legal entities without additional setup. Option D is incorrect because Excel integration typically accesses data from a single legal entity, not multiple.

Answer

General ledger inquiry

Answer

Power BI

Answer

Excel integration

Question 14

A company uses Dynamics 365 Finance. The accounts receivable team needs to send payment reminders to customers automatically. Which feature should they configure?

Accepted Answer

Collection letters. The collection letter feature in Dynamics 365 Finance automatically sends payment reminders to customers. Option C is wrong because interest notes are for charging interest on overdue payments, not for sending reminders. Option B is wrong because customer payment journals record payments. Option D is wrong because invoice journals record invoices.

Answer

Customer payment journals

Answer

Interest notes

Answer

Invoice journals

Question 15

A company uses Dynamics 365 Finance. The finance team notices that the general ledger journal balance does not equal the sum of debits and credits. What could cause this discrepancy?

Accepted Answer

Unbalanced journal entry. An unbalanced journal entry, where total debits do not equal total credits, will cause the general ledger balance to not match the sum of debits and credits. Option A is incorrect because the voucher number series merely assigns identifiers and does not affect accounting balances. Option B is incorrect because posting profile configuration determines how transactions are posted to accounts but does not cause an imbalance if the journal entry itself is balanced. Option D is incorrect because user permissions control access rights, not the balancing of journal entries.

Answer

Incorrect voucher number series

Answer

Incorrect posting profile configuration

Answer

User permissions