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

Question 1

A company uses Dynamics 365 Finance and plans to implement Copilot for Finance to automate vendor invoice processing. Which prerequisite must be configured to enable AI-powered invoice matching?

Accepted Answer

AI Builder enabled with Power Apps license. Copilot for Finance leverages AI Builder for AI-powered invoice matching, and AI Builder requires a Power Apps license to be enabled. Option A is incorrect because electronic reporting formats are used for document generation, not for AI matching. Option B is incorrect because workflow for invoice approval is a process control feature, not a prerequisite for AI. Option D is incorrect because data entities are for data import/export, not for enabling AI capabilities.

Answer

Electronic reporting format for invoices

Answer

Workflow for invoice approval

Answer

Data entities configured for import/export

Question 2

Which TWO actions can you perform using the Financial Reporting tool in Dynamics 365 Finance?

Accepted Answer

Combine data from multiple legal entities in a single report. Options A and E are correct. Financial Reporting can produce balance sheets and income statements (E) and can combine data from multiple legal entities using reporting trees (A). Option B is incorrect because configuring payment terms is done in Accounts payable, not in Financial Reporting. Option C is incorrect because configuring budget control rules is a separate feature in Budgeting. Option D is incorrect because posting journal entries is a general ledger function.

Answer

Configure payment terms for vendors

Answer

Configure budget control rules

Answer

Post journal entries to the general ledger

Question 3

Which THREE elements are required when setting up budget control in Dynamics 365 Finance?

Accepted Answer

Budget interval. The three required elements for setting up budget control in Dynamics 365 Finance are budget intervals, budget thresholds, and budget control rules. Budget intervals define the time period for budget control, budget thresholds set tolerance levels for overspending, and budget control rules specify the conditions and actions for enforcing budget control. Option B (budget plan template) is incorrect because budget plan templates are used for budget planning and not for budget control. Option D (reporting currency) is incorrect because reporting currency is an optional configuration and not a mandatory element for budget control.

Answer

Budget plan template

Answer

Reporting currency

Question 4

Which TWO features in Dynamics 365 Finance can help automate accounts payable processes?

Accepted Answer

Vendor invoice automation. Options C and E are correct. Vendor invoice automation automatically processes invoices, reducing manual effort in accounts payable. Payment proposal generates payments based on due dates and vendor terms, streamlining payment processes. Option A is wrong because collections management is for accounts receivable, not accounts payable. Option B is wrong because bank reconciliation is a cash management function, not directly related to accounts payable automation. Option D is wrong because customer payment predictions is for accounts receivable.

Answer

Collections management

Answer

Bank reconciliation

Answer

Customer payment predictions

Question 5

Refer to the exhibit. The budget control configuration shows that budget checks are enabled for purchase orders and vendor invoices. A purchase order is created for a budget amount that is 90% of the available budget. What happens during budget checking?

Accepted Answer

A warning is displayed but the purchase order can be posted.. The budget control configuration includes a warning threshold (e.g., 80%), and since the purchase order uses 90% of the available budget, it exceeds the warning threshold but not the error threshold (100%), so a warning is displayed but the purchase order can still be posted. Option A is incorrect because the purchase order is not blocked unless it exceeds the error threshold. Option B is incorrect because budget overrun (exceeding 100%) does not occur. Option C is incorrect because purchase orders are configured for budget checking as shown in the exhibit.

Answer

The purchase order is blocked from posting.

Answer

The purchase order is allowed and budget is overrun.

Answer

The budget check is skipped because purchase orders are not configured.

Question 6

Refer to the exhibit. A company in Germany configures electronic reporting to generate ISO 20022 credit transfer payment files. The finance team reports that the generated file fails validation by the bank. What is the most likely cause?

Accepted Answer

The country context is set incorrectly for the bank's requirements.. The company is in Germany (DEU), but the bank's validation likely requires a specific country context that matches the bank's local requirements. ISO 20022 credit transfer formats are country-specific; using the default DEU format may omit required fields or use incorrect codes. Option A is wrong because model mapping missing fields would cause a different error during generation, not validation failure. Option B is wrong because the format name (ISO 20022 Credit Transfer) is standard and correct. Option C is wrong because version 10.0.30 is current and generally compatible.

Answer

The model mapping is missing required fields.

Answer

The format name is incorrect for credit transfers.

Answer

The version number is outdated.

Question 7

Refer to the exhibit. A user tries to post a journal with the account string 1234567-IT-CC001. The general ledger account structure requires main account (7 characters), department (3 characters), and cost center (4 characters). The system rejects the entry. What is the most likely reason?

Accepted Answer

The department segment length is incorrect.. The department segment 'IT' is only 2 characters long, but the account structure requires a department of 3 characters. This violation of segment length causes the journal to be rejected. Option A is incorrect because the cost center segment length is not the primary issue (though it may also be incorrect). Option C is incorrect because the main account segment '1234567' has exactly 7 characters. Option D is incorrect because the issue is segment length, not the existence of the department value.

Answer

The cost center segment length is incorrect.

Answer

The main account segment length is incorrect.

Answer

The department value does not exist in the dimension values.

Question 8

A company needs to generate financial statements that comply with local accounting standards in multiple countries. Which Dynamics 365 Finance module should be used to define and manage these reporting requirements?

Accepted Answer

Financial reporting. The Financial reporting module in Dynamics 365 Finance allows creation and management of financial statements for multiple reporting standards. Option A is wrong because Budgeting is for budget planning, not for local reporting standards. Option B is wrong because General ledger is the core ledger but does not directly manage local reporting requirements. Option D is wrong because Accounts payable is for vendor transactions.

Answer

Budgeting

Answer

General ledger

Answer

Accounts payable

Question 9

A company uses Dynamics 365 Finance and plans to implement Copilot for Finance to automate vendor invoice processing. Which prerequisite must be configured to enable AI-powered invoice matching?

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

Accepted Answer

Consolidations. The Consolidations module in Dynamics 365 Finance is designed to consolidate financial data from multiple legal entities. Option A is wrong because Intercompany accounting handles transactions between entities, not consolidation. Option B is wrong because Financial reporting uses data from the ledger but does not perform the consolidation process itself. Option D is wrong because the General ledger does not consolidate automatically.

Answer

Intercompany accounting

Answer

Financial reporting

Answer

General ledger

Question 10

An organization wants to automate the process of reconciling bank transactions with entries in Dynamics 365 Finance. Which feature should be used?

Accepted Answer

Bank reconciliation. The Bank reconciliation module in Dynamics 365 Finance automates matching bank statement lines to ledger entries. Option A is wrong because Cash and bank management is a module that includes bank reconciliation, but not the specific feature. Option B is wrong because Advanced bank reconciliation is an optional add-on that provides more automation, but the standard bank reconciliation feature is available in Cash and bank management. Option C is wrong because Payment journal is for recording payments, not reconciliation.

Answer

Cash and bank management

Answer

Advanced bank reconciliation

Answer

Payment journal

Question 11

A company using Dynamics 365 Finance needs to ensure that purchase orders exceed a certain amount require additional approval from a director. Which feature should be configured?

Accepted Answer

Purchase order workflow. Purchase order workflow in Dynamics 365 Finance allows configuration of conditional approval rules, such as requiring director approval for purchase orders exceeding a certain amount. Option A is incorrect because an approval journal is not a standard concept in Dynamics 365 Finance for this purpose. Option B is incorrect because procurement and sourcing parameters cover general settings but not specific approval workflows. Option C is incorrect because the budget manager role is related to budget control, not purchase order approval.

Answer

Approval journal

Answer

Procurement and sourcing parameters

Answer

Budget manager role

Question 12

A company uses Dynamics 365 Finance and needs to allocate overhead costs from a cost center to multiple departments based on square footage. Which costing method should be used?

Accepted Answer

Cost allocation. Cost allocation in Dynamics 365 Finance allows distributing costs based on allocation bases such as square footage. Option A is incorrect because activity-based costing assigns costs based on activities, not directly by allocation bases like square footage for overhead allocation between departments. Option C is incorrect because standard costing is primarily used for inventory valuation and cost management, not for allocating overhead costs. Option D is incorrect because absorption costing is a method for assigning all manufacturing costs to products, not for distributing costs from a cost center to departments.

Answer

Activity-based costing

Answer

Standard costing

Answer

Absorption costing

Question 13

A company wants to use AI to automatically classify vendor invoices in Dynamics 365 Finance. Which feature should be enabled?

Accepted Answer

Invoice capture. Invoice capture in Dynamics 365 Finance uses AI to automatically classify vendor invoices. Option A is incorrect because Intelligent order management is for sales orders, not invoices. Option B is incorrect because Vendor collaboration is a portal for vendor communication, not AI classification. Option C is incorrect because OCR is a technology used within Invoice capture, but the feature itself is Invoice capture.

Answer

Intelligent order management

Answer

Vendor collaboration

Answer

Optical character recognition (OCR)

Question 14

An organization needs to track the budget versus actual expenses for each department in real time. Which Dynamics 365 Finance feature should be used?

Accepted Answer

Budget control. Budget control in Dynamics 365 Finance enables real-time tracking of budget versus actual expenses by automatically checking budget balances against actual expenditures. Therefore, option C is correct. Option A (Budget planning) is used for creating and approving budgets, not for tracking in real time. Option B (General ledger) records actual transactions but does not automatically compare to budget in real time. Option D (Financial reports) can be generated on demand but are not inherently real-time.

Answer

Budget planning

Answer

General ledger

Answer

Financial reports

Question 15

A company using Dynamics 365 Finance needs to automate the calculation and posting of periodic transactions such as prepayments and accruals. Which feature should be used?

Accepted Answer

Periodic journal. The Periodic journal in Dynamics 365 Finance can be set up to automatically generate recurring journal entries for prepayments, accruals, and other periodic transactions. Option B is wrong because Financial Reporting is for reporting, not posting. Option C is wrong because Allocation journals allocate costs but do not handle prepayments/accruals automatically. Option D is wrong because the General journal is for manual entries.

Answer

Financial reporting

Answer

Allocation journal

Answer

General journal