MB-920 Describe Dynamics 365 Finance Practice Test 5 — 15 Questions

Question 1

A company needs to track fixed assets in multiple locations and calculate depreciation differently based on asset type. Some assets use straight-line depreciation, while others use declining balance. What is the best practice to manage this in Dynamics 365 Finance?

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

Accepted Answer

Define multiple depreciation profiles and assign them to the appropriate fixed asset groups.. Depreciation profiles in Dynamics 365 Finance define the method (straight-line, declining balance, etc.), convention, and posting frequency. Assigning multiple depreciation profiles to the appropriate fixed asset groups allows each asset type to depreciate according to its required method. This is the standard configuration because depreciation profiles are reusable and can be assigned at the group or book level, enabling different methods per asset type without duplicating asset records.

Answer

Set up value models with different depreciation conventions for each asset.

Answer

Create separate asset groups for each depreciation method and assign the method to the group.

Answer

Use fixed asset journals to manually calculate and post depreciation for each asset type.

Question 2

Which THREE features are available in Dynamics 365 Finance to support compliance with International Financial Reporting Standards (IFRS)?

Accepted Answer

Revenue recognition schedules for deferred revenue. Option A is correct because Dynamics 365 Finance provides revenue recognition schedules that let you defer revenue and recognize it over time in line with IFRS 15's five-step model and performance-obligation timing. Option B is correct because multi-currency accounting with exchange rate adjustments (including realized/unrealized gain-loss postings and revaluation) supports IAS 21 requirements for translating foreign-currency transactions and balances. Option C is correct because depreciation profiles for different asset types support IAS 16 by letting you apply appropriate depreciation methods, useful lives, and conventions per asset class. Option D does not belong because the vendor collaboration portal is a procurement/supplier-engagement feature, not an IFRS financial-reporting capability. Option E does not belong because budget control enforces internal expenditure limits and is a management-control feature rather than an IFRS compliance feature.

Answer

Vendor collaboration portal

Answer

Budget control for expenditure limits

Question 3

Which TWO are valid methods for posting vendor invoices in Dynamics 365 Finance?

Accepted Answer

Purchase order-based invoice. Option C (Purchase order-based invoice) is correct because in Dynamics 365 Finance you can post a vendor invoice directly against a purchase order, matching the invoice lines to the PO receipt (product receipt) and updating the PO's invoiced quantities and encumbrances. Option D (Vendor invoice entry) is correct because the Vendor invoice journal (pending vendor invoice / invoice journal) is the standard Accounts payable method for manually recording a vendor invoice that is not tied to a purchase order, posting to the invoice account and offset ledger accounts. Option A (General journal entry) is not the designated vendor invoice posting method — a general journal can hit the vendor ledger via a ledger account, but it is not the AP vendor invoice posting mechanism. Option B (Sales order invoice) is incorrect because sales orders generate customer (accounts receivable) invoices, not vendor (accounts payable) invoices. Option E (Free text invoice) is incorrect because free text invoices are used to bill customers, not to post vendor invoices.

Answer

General journal entry

Answer

Sales order invoice

Answer

Free text invoice

Question 4

A company uses Dynamics 365 Finance and wants to enable AI-driven insights to detect anomalies in financial transactions. Which Copilot feature should be used?

Accepted Answer

Enable the AI anomaly detection in the Finance insights module.. The AI anomaly detection feature in the Finance insights module uses machine learning to identify unusual financial transactions. Option A is incorrect because 'Activate Copilot for Finance insights to generate reports' focuses on report generation, not anomaly detection. Option B is irrelevant as Copilot for Sales is designed for sales processes, not financial anomaly detection. Option D is also incorrect as Copilot for Service is for customer service scenarios, not financial transactions.

Answer

Activate Copilot for Finance insights to generate reports.

Answer

Use Copilot for Sales to analyze transaction data.

Answer

Configure Copilot for Service to review financial transactions.

Question 5

A manufacturing company uses Dynamics 365 Finance. They want to ensure that raw materials are automatically reserved when a production order is created and that the cost of the raw materials is included in the production order cost. Which costing method supports this requirement?

Accepted Answer

Standard costing. Standard costing in Dynamics 365 Finance supports automatic reservation of raw materials when a production order is created and includes the cost of those materials in the production order cost. Standard costing uses predefined costs for materials and resources, enabling accurate cost estimation and variance analysis. This method is designed for manufacturing environments where costs are stable and can be predetermined.

Answer

Weighted average

Answer

LIFO

Answer

FIFO

Question 6

A multinational company uses Dynamics 365 Finance with multiple legal entities. They need to consolidate financial data from all entities into a single reporting entity for quarterly reporting. The consolidation must eliminate intercompany transactions. Which feature should they use?

Accepted Answer

Consolidation [Elimination]. Consolidation [Elimination] in Dynamics 365 Finance is designed to consolidate financial data from multiple legal entities and eliminate intercompany transactions. Option B is wrong because Intercompany accounting records transactions but does not eliminate them. Option C is wrong because Ledger allocation rules allocate costs, not consolidate. Option D is wrong because Global budgeting is for budget control.

Answer

Intercompany accounting

Answer

Ledger allocation rules

Answer

Global budgeting

Question 7

A company is implementing Dynamics 365 Finance. They need to support multiple languages and currencies for international subsidiaries. Which module should they configure?

Accepted Answer

System administration. System administration contains settings for languages, currencies, and localization features that apply across the entire organization. Option A is incorrect because Accounts payable focuses on vendor transactions, not system-wide configurations. Option C is incorrect because Organization administration manages legal entities and organizational structures, but the multilingual and multi-currency settings are configured in System administration. Option D is incorrect because General ledger deals with the chart of accounts and financial dimensions, not language and currency settings.

Answer

Accounts payable

Answer

Organization administration

Answer

General ledger

Question 8

A retail company uses Dynamics 365 Finance. They want to automatically post revenue and cost of goods sold (COGS) when a sales order is invoiced. Which posting setup is required?

Accepted Answer

Inventory posting. Inventory posting is used to define accounts for revenue, COGS, and inventory when items are sold. Option A is incorrect because Procurement and sourcing posting handles purchase-related transactions, not sales. Option B is incorrect because Accounts receivable posting manages customer balances and payments, not revenue/COGS. Option D is incorrect because General ledger posting defines main accounts but does not specify the posting setup for sales orders; that is done in Inventory posting.

Answer

Procurement and sourcing posting

Answer

Accounts receivable posting

Answer

General ledger posting

Question 9

A company uses Dynamics 365 Finance with budget control enabled. They notice that budget funds are not being consumed when a purchase requisition is approved. The budget check is configured to occur on journal approval. What is the most likely cause?

Accepted Answer

The budget check is not configured for purchase requisitions. The most likely cause is that budget check is not configured for purchase requisitions. Even if budget control is enabled and the budget check is set to occur on journal approval, purchase requisitions may not be included in the budget check if the document type is not enabled for budget control. Therefore, funds are not consumed when the requisition is approved.

Answer

Budget thresholds are set too high

Answer

The document level is set to purchase order

Answer

The budget source is incorrect

Question 10

A company is implementing Dynamics 365 Finance. They need to ensure that when a sales invoice is posted, the system automatically creates a related project transaction for work breakdown structure (WBS) elements. Which integration feature should they use?

Accepted Answer

Project accounting integration. Project accounting integration in Dynamics 365 Finance links financial postings — such as sales invoices — to project transactions and WBS elements, enabling costs and revenues to be tracked against project activities automatically. When a sales invoice is posted, this integration creates the corresponding project transaction against the designated WBS element. This is the purpose-built feature for tying financial documents to project structures.

Answer

Procurement integration

Answer

Budgeting integration

Answer

Accounts receivable integration

Question 11

Which TWO are valid document types in Dynamics 365 Finance for budget control?

Accepted Answer

Purchase requisitions. Purchase requisitions (B) are a valid budget control document type in Dynamics 365 Finance, as they are one of the source documents that can be enabled for budget checking to encumber funds before a purchase order is created. Purchase orders (D) are also a valid budget control document type, since they represent the commitment of budgeted funds and are checked against the budget during confirmation and invoicing. Both are configured under Budget control > Setup > Budget control configuration > Document types, where the source document types available for budget checking include purchase requisitions and purchase orders. Sales orders (A) are not a budget control document type because they relate to revenue rather than expenditure budgeting. General journals (C) are not a budget control document type in the standard budget control configuration, as budget register entries handle budget transactions separately. Vendor invoices (E) are not a standalone budget control document type; budget checking for vendor invoices occurs through the associated purchase order, not as an independent document type.

Answer

Sales orders

Answer

General journals

Answer

Vendor invoices

Question 12

A multinational company uses Dynamics 365 Finance. They need to report financial data in both local GAAP and IFRS. Which feature should they use?

Accepted Answer

Financial dimensions. Correct answer: D - Financial dimensions. Financial dimensions in Dynamics 365 Finance allow you to track financial data by different attributes, such as cost center, department, or accounting standard. By setting up a financial dimension for 'Accounting Standard' and assigning values like 'Local GAAP' and 'IFRS', you can report in both standards simultaneously. Option A is incorrect because Currency translation deals with converting amounts between currencies, not accounting standards. Option B is incorrect because Ledger period refers to the fiscal period (month, quarter, year) for transactions, not for tracking different standards. Option C is incorrect because Consolidation is used to combine financial results of multiple legal entities, not to report under multiple accounting standards within one entity.

Answer

Currency translation

Answer

Ledger period

Answer

Consolidation

Question 13

A company using Dynamics 365 Finance needs to allocate overhead costs to different departments based on square footage. What should they set up?

Accepted Answer

Allocation rules in General ledger. Allocation rules in General ledger are designed to distribute amounts from a source account to multiple destination accounts based on a defined basis, such as square footage, headcount, or percentage. This is the correct feature for allocating overhead costs to departments by square footage.

Answer

Budget transfer

Answer

Cost accounting

Answer

Fixed asset depreciation

Question 14

A company needs to ensure that only users with the 'Accounts payable manager' role can approve vendor invoices. How should this be configured?

Accepted Answer

Assign the role in Security configuration. In Microsoft Dynamics 365 Finance, role-based security is the mechanism that controls which users can perform specific actions, such as approving vendor invoices. By assigning the 'Accounts payable manager' role to the appropriate users in Security configuration, you ensure that only those users have the privilege to approve vendor invoices. This is the standard and most direct way to enforce such a requirement, as the role includes the necessary duties and privileges for invoice approval. Other options like workflows or audit policies do not restrict approval to a specific role; they may enforce additional controls but not role-based access.

Answer

Configure an Organization hierarchy

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Set up an Audit policy

Answer

Create a workflow that requires the role

Question 15

Which THREE are valid financial dimensions in Dynamics 365 Finance?

Accepted Answer

Cost center. In Dynamics 365 Finance, financial dimensions are configurable data elements that add analytical detail to ledger accounts, and the standard out-of-the-box dimensions include Cost center (B), Department (E), and Project (D), which are all backed by dimension values used for budgeting, reporting, and posting analysis. Cost center (B) is valid because it is a core predefined dimension used to track costs by organizational unit. Department (E) is valid because it is another standard predefined dimension representing organizational structure for financial reporting. Project (D) is valid because it is a supported dimension that links transactions to project accounting and cost tracking. Vendor (A) and Location (C) are not standard financial dimensions in Dynamics 365 Finance; Vendor is typically a party/record on transactions rather than a ledger dimension, and Location is not one of the predefined financial dimensions.

Answer

Vendor

Answer

Location