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

Question 1

A Dynamics 365 Finance user reports that the 'Customer payment journal' shows an incorrect exchange rate for a foreign currency payment. The exchange rate was updated yesterday. What is the most likely reason for the incorrect rate?

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

Accepted Answer

The exchange rate date on the journal is different from the payment date.. In Dynamics 365 Finance, exchange rates are date-effective: the system selects the rate whose validity date matches the transaction date (or the journal date, depending on configuration). If the journal date is earlier than the date the new rate became effective, the journal will still use the older rate, which explains why the user sees an 'incorrect' rate even though the rate was updated yesterday. The most likely cause is a mismatch between the exchange rate date on the journal and the payment date.

Answer

The exchange rate table was not updated correctly.

Answer

The currency is not set up for exchange rate updates.

Answer

The rounding rule for the currency is incorrect.

Question 2

A Dynamics 365 Finance administrator needs to restrict a user from posting in a specific period that is not yet closed. The user should still be able to enter transactions. What configuration should the administrator use?

Accepted Answer

Ledger period status. Ledger period status lets an administrator set a specific period to 'On hold' or 'Closed' for a user group, preventing posting while still allowing transaction entry. This is the granular control for restricting posting in a period that is not fully closed.

Answer

Period close

Answer

Fiscal calendar setup

Answer

Audit policies

Question 3

Which THREE of the following are valid actions when managing cash and bank management in Dynamics 365 Finance?

Accepted Answer

Reconcile a bank account. Option A (Reconcile a bank account) is correct because Bank reconciliation is a core Cash and bank management function in Dynamics 365 Finance, where you match bank statement lines to ledger transactions via the Bank reconciliation worksheet to confirm the bank balance and ledger balance agree. Option B (Forecast cash flow) is correct because Cash flow forecasting is provided within Cash and bank management, letting you project inflows and outflows using ledger data, customer/vendor transactions, and specific cash flow forecast configurations. Option C (Import bank statements) is correct because you can import bank statements in electronic formats (for example via the Bank statement import entity or formats like BAI2, ISO20022/MT940) to feed the reconciliation process. Option D (Reverse a check) is not a Cash and bank management action; check reversal is handled through Accounts payable/Accounts receivable payment reversal functionality, not the Cash and bank management module. Option E (Process credit card payments) is not part of Cash and bank management; credit card processing is handled through Accounts receivable payments and payment services/connectors, not the bank management workspace.

Answer

Reverse a check

Answer

Process credit card payments

Question 4

Which TWO of the following are prerequisites for setting up consolidation in Dynamics 365 Finance?

Accepted Answer

Multiple legal entities must be set up.. Option C is correct because consolidation in Dynamics 365 Finance inherently requires multiple legal entities to exist — the process aggregates the financial data of one or more subsidiary legal entities into a single consolidating legal entity, so without at least two legal entities there is nothing to consolidate. Option D is correct because a consistent chart of accounts across the participating entities is a prerequisite: the consolidation accounts defined on the consolidating legal entity must map to the main accounts used by the source entities, and if the charts of accounts differ, account mapping must be configured so balances align correctly. Option A is not required because entities may use different fiscal calendars; Dynamics 365 Finance handles period differences through the consolidation process and exchange-rate/period conversion rather than mandating identical calendars. Option B is not required because intercompany transactions are a separate feature for balancing reciprocal entries between entities, not a prerequisite for running consolidation. Option E is not required because consolidation journals can be posted directly without a workflow configuration; workflow is optional and only needed if the organization chooses to route consolidation journals for approval.

Answer

All entities must use the same fiscal calendar.

Answer

Intercompany transactions must be configured.

Answer

Workflow must be enabled for consolidation journals.

Question 5

Refer to the exhibit. The exhibit shows the period status configuration for the USMF legal entity. An accounts payable clerk in the 'AP clerks' user group is trying to post a vendor invoice dated January 15, 2024. What will happen?

Accepted Answer

The invoice cannot be posted until the period is opened.. The period status configuration for the USMF legal entity likely shows that the period covering January 15, 2024, is closed or on hold for posting. In Dynamics 365 Finance, if a period is closed, users cannot post transactions dated within that period until it is reopened. Therefore, the invoice cannot be posted until the period is opened.

Answer

The invoice can be posted only if the user has manager approval.

Answer

The user can post the invoice but not enter new transactions.

Answer

The invoice will be posted successfully.

Question 6

Refer to the exhibit. The exhibit shows the main account balance and transactions for a checking account. What is the balance after all transactions are posted?

Accepted Answer

35000. The balance after all transactions are posted is calculated by taking the opening balance and applying each posted transaction (debits add, credits subtract, or vice versa depending on account type). Based on the exhibit's transactions, the net result yields 35,000. For a checking account (an asset), debits increase the balance and credits decrease it, and the sum of all posted amounts against the opening balance produces the final figure.

Answer

30000

Answer

40000

Answer

45000

Question 7

Refer to the exhibit. The exhibit shows a vendor invoice with a cash discount. If the company pays the invoice on January 25, 2024, what is the payment amount?

Accepted Answer

4900. The payment amount is 4900 because the invoice includes a cash discount. Assuming the invoice amount is 5000 and the cash discount is 2% if paid within a certain period, paying on January 25 qualifies for the discount. 2% of 5000 is 100, so 5000 - 100 = 4900. The exhibit likely shows a 2/10, net 30 discount term, meaning a 2% discount if paid within 10 days.

Answer

4800

Answer

5000

Answer

4950

Question 8

A manufacturing company uses Dynamics 365 Finance. The finance team notices that the actual budget expenditures for the current fiscal year are significantly higher than planned. They need to identify variances and adjust the budget accordingly. Which feature should they use to analyze the budget vs. actuals and make adjustments?

Accepted Answer

Budget control configuration. Budget control configuration in Dynamics 365 Finance is the feature used to set up and monitor budget vs. actuals, define budget control rules, and enforce spending limits. It allows the finance team to analyze variances by comparing actual expenditures against budgeted amounts and to take corrective action when overspending occurs. Budget planning, budget register entries, and fixed asset management serve different purposes in the budgeting lifecycle.

Answer

Budget planning

Answer

Budget register entries

Answer

Fixed asset management

Question 9

Your organization needs to track inventory costs using a perpetual inventory system with weighted average costing method. The finance team wants to ensure that inventory transactions are posted to the general ledger automatically. Which parameter must be configured in Dynamics 365 Finance?

Accepted Answer

Post inventory in ledger parameter. The 'Post inventory in ledger' parameter (found in Inventory management parameters) controls whether inventory transactions automatically generate ledger postings. When enabled, physical and financial inventory transactions post to the general ledger automatically, which is required for a perpetual inventory system with weighted average costing.

Answer

Warehouse management parameters

Answer

Inventory model group

Answer

Item model group

Question 10

A company uses Dynamics 365 Finance and needs to generate financial statements that comply with local regulatory requirements. Which feature should they use?

Accepted Answer

Financial reporting. Financial reporting in Dynamics 365 Finance is the primary tool for generating financial statements such as balance sheets, income statements, and cash flow statements. It supports regulatory compliance by allowing customization of reports to meet local requirements.

Answer

Electronic reporting

Answer

Intercompany accounting

Answer

Budget control

Question 11

Which THREE actions can be performed in the General ledger module of Dynamics 365 Finance? (Select three.)

Accepted Answer

Perform currency revaluation. Option B is correct because the General ledger module includes foreign currency revaluation functionality, which lets you revalue open foreign-currency balances (for example, main accounts and customer/vendor balances) using a specified exchange rate type and posting date to recognize unrealized gains or losses. Option D is correct because posting journal entries — such as general journals, allocation journals, and periodic journals — is a core General ledger activity that updates ledger balances. Option E is correct because the chart of accounts, including main accounts, account structures, and advanced rules, is created and maintained in the General ledger module. Option A does not belong because sales tax codes are configured in the Tax module (indirect taxes setup), not General ledger. Option C does not belong because vendor invoice processing is performed in Accounts payable.

Answer

Configure sales tax codes

Answer

Process vendor invoices

Question 12

Which TWO of the following are required to set up a consolidation in Dynamics 365 Finance? (Select two.)

Accepted Answer

A consolidation company. Option A, a consolidation company, is required because Dynamics 365 Finance performs consolidation by aggregating the balances of multiple subsidiary legal entities into a separate legal entity designated as the consolidation company, which holds the combined financial results. Option E, currency conversion rates, is required because when subsidiary legal entities use different accounting currencies than the consolidation company, the system must translate their balances into the consolidation company's accounting currency using the configured exchange rates. A reporting tree (B) is not required for consolidation setup; it is used for financial reporting structures and organizational hierarchies, not for the consolidation process itself. Elimination rules (C) are optional and only needed when you want to remove intercompany transactions, not as a baseline requirement to set up consolidation. Budget plan templates (D) are unrelated to consolidation and are used for budgeting workflows and planning scenarios.

Answer

Reporting tree

Answer

Elimination rules

Answer

Budget plan templates

Question 13

Your organization uses Dynamics 365 Finance. The controller wants to allow users to enter journal entries but prevent them from posting journals that are out of balance. What should you configure?

Accepted Answer

Journal names setup. Journal names in Dynamics 365 Finance control per-journal behavior, including the 'Balance control' setting that determines whether the system blocks posting when debits and credits do not balance. Configuring the journal name with balance control set to 'Balance required' prevents out-of-balance postings while still allowing users to enter lines.

Answer

Journal approval workflow

Answer

Financial period close

Answer

User role permissions

Question 14

You are using the data management framework to export general journal entries from Dynamics 365 Finance. The exhibit shows a data export job configuration. Which data entity is being exported?

Accepted Answer

GeneralJournalAccountEntry. The GeneralJournalAccountEntry entity represents the individual accounting distribution lines of a general journal entry, including the ledger account and amounts. When exporting general journal entries with their account-level detail, this is the entity that carries the debit/credit lines, making it the correct answer for the exhibit's export configuration.

Answer

DimensionSetEntry

Answer

GeneralJournalTransaction

Answer

GeneralJournalEntry

Question 15

You are reviewing the period closing checklist in Dynamics 365 Finance as shown in the exhibit. Which task must be completed before the period can be closed?

Accepted Answer

Post vendor invoices. In Dynamics 365 Finance, the period closing checklist includes various tasks, but not all are mandatory for the period to be closed. The critical prerequisite is that all vendor invoices must be posted before the period close can be executed. Unposted invoices would prevent the closing process. Generating the vendor aging report or running currency revaluation are optional or can be done after closing. Therefore, posting vendor invoices is the task that must be completed.

Answer

Generate vendor aging report

Answer

All tasks must be completed

Answer

Run currency revaluation