MB-920 Describe Dynamics 365 Finance Practice Test 6 — 15 Questions

Question 1

Which TWO of the following are benefits of using the General ledger module in Dynamics 365 Finance?

Accepted Answer

Provides a chart of accounts to categorize financial transactions. Options C and D are correct. Option C is correct because the General ledger provides a chart of accounts to categorize financial transactions. Option D is correct because it offers real-time financial insights and reporting. Option A is wrong because managing vendor payments and invoices is done in Accounts payable. Option B is wrong because handling customer invoicing and collections is done in Accounts receivable. Option E is wrong because inventory valuation is part of Inventory management.

Answer

Manages vendor payments and invoices

Answer

Handles customer invoicing and collections

Answer

Manages inventory valuation

Question 2

Which THREE of the following are capabilities of the Budgeting module in Dynamics 365 Finance?

Accepted Answer

Budget control to monitor budget consumption. Budget control is a capability of the Budgeting module that monitors budget consumption against actual expenditures. Option C is correct because budget register entries allow users to record and manage budget amounts. Option E is correct because budget planning enables the creation and management of budget proposals. Option B is incorrect because processing vendor invoices is handled in the Accounts payable module, not the Budgeting module. Option D is incorrect because generating financial statements is performed in the Financial reporting module.

Answer

Process vendor invoices

Answer

Generate financial statements

Question 3

Which TWO of the following are features of the Cash and bank management module in Dynamics 365 Finance?

Accepted Answer

Cash flow forecasting. Options B and D are correct. Cash flow forecasting (option B) is a feature of the Cash and bank management module. Bank reconciliation (option D) is also a core feature of the Cash and bank management module. Option A (Credit management) is incorrect; credit management is handled in the Accounts receivable module. Option C (Budget control) is incorrect; budget control is part of the Budgeting module. Option E (Fixed asset depreciation) is incorrect; fixed asset depreciation is managed in the Fixed assets module.

Answer

Credit management

Answer

Budget control

Answer

Fixed asset depreciation

Question 4

Refer to the exhibit. A company has configured the General ledger parameters as shown. A user attempts to post a purchase order that exceeds the remaining budget for the current fiscal year. What will happen?

Accepted Answer

The purchase order will be blocked and an error message will appear.. BudgetControl is enabled and AllowOverbudget is false, so the system will block the transaction and show a budget control error. Option A is wrong because the system will not allow posting; it will generate an error. Option B is wrong because there is no automatic approval workflow triggered by budget control. Option D is wrong because the system will not create a warning without blocking; it blocks by default when AllowOverbudget is false.

Answer

The purchase order will be posted and the budget will be adjusted automatically.

Answer

The purchase order will be placed on hold for manager approval.

Answer

The purchase order will be posted successfully but with a warning.

Question 5

Refer to the exhibit. A Dynamics 365 Finance system has a vendor invoice workflow configured as shown. A vendor invoice with an amount of $15,000 is submitted. Who will be required to approve the invoice?

Accepted Answer

First the manager, then the director. The workflow first checks if the amount exceeds $10,000. Since $15,000 is greater than $10,000, the invoice requires manager approval first. After that, the second step always requires director approval. Therefore, the manager approves first, followed by the director. Option A is incorrect because the order is reversed. Option C is wrong because the director's approval is also required. Option D is wrong because the manager's approval is required first.

Answer

First the director, then the manager

Answer

Only the manager

Answer

Only the director

Question 6

Refer to the exhibit. An organization in Dynamics 365 Finance has defined financial dimensions as shown. What is the total length of the account structure for a journal entry?

Accepted Answer

14. The account structure comprises the main account (length 6), department (length 3), and cost center (length 5), totaling 14 (6+3+5=14). Option B (15) is incorrect because it adds an extra character. Option C (11) is incorrect because it likely omits the main account or miscalculates. Option D (8) is incorrect because it only accounts for two segments.

Answer

15

Answer

11

Answer

8

Question 7

A company is implementing Dynamics 365 Finance and needs to support multiple legal entities with different fiscal calendars. Which feature should be used to manage this requirement?

Accepted Answer

Individual fiscal calendars assigned to each legal entity.. Dynamics 365 Finance allows each legal entity to have its own fiscal calendar, enabling support for different fiscal years and period configurations across entities. Option A is incorrect because fiscal year templates define standard period patterns but are applied within a calendar, not directly to entities. Option B is incorrect because shared fiscal calendars would enforce the same fiscal year across entities, conflicting with the requirement for different calendars. Option C is incorrect because ledger period configurations determine period statuses (e.g., open/close) within a calendar, not the calendar itself.

Answer

Fiscal year templates applied to all entities.

Answer

Shared fiscal calendars across all legal entities.

Answer

Ledger period configurations in the general ledger.

Question 8

A multinational corporation using Dynamics 365 Finance needs to revalue foreign currency bank accounts at month-end. The finance manager wants to automate this process and ensure that exchange rate differences are posted to the correct accounts. What is the best approach?

Accepted Answer

Use the Foreign currency revaluation feature in General ledger.. The Foreign currency revaluation feature in Dynamics 365 Finance automates the process and posts differences to the specified accounts. Option A is wrong because manual journal entries are error-prone and not automated. Option B is wrong because the General journal does not automatically revalue accounts. Option C is wrong because exchange rate types define rates, not automate revaluation.

Answer

Create manual journal entries for each bank account using the month-end exchange rate.

Answer

Use the General journal to post exchange rate adjustments.

Answer

Configure exchange rate types for each currency pair.

Question 9

A company uses Dynamics 365 Finance and needs to track expenses by department and project. Which dimension type should be used to capture this information?

Accepted Answer

Financial dimensions.. Financial dimensions (Option D) are used to track attributes like department and project in Dynamics 365 Finance. Account structures (Option A) define the chart of accounts, not for tracking additional attributes. Dimension sets (Option B) are used for reporting and analysis, not for transaction capture. Advanced rules (Option C) allow for conditional dimension combinations, but the base dimension type for capturing department and project is financial dimensions.

Answer

Account structures.

Answer

Dimension sets.

Answer

Advanced rules.

Question 10

An organization is migrating to Dynamics 365 Finance and needs to ensure that historical financial data from the legacy system is preserved for reporting. What is the recommended approach?

Accepted Answer

Use data migration tools to import historical data into Dynamics 365 Finance.. Dynamics 365 Finance provides data migration tools that allow importing historical financial data from legacy systems, preserving details for reporting. Option B is wrong because manual re-entry is inefficient and error-prone. Option C is wrong because migrating only summary balances loses transactional detail needed for reporting. Option D is wrong because maintaining the legacy system is costly and does not leverage the new system's capabilities.

Answer

Re-enter all historical transactions manually.

Answer

Only migrate summary balances for prior periods.

Answer

Maintain the legacy system for historical reporting.

Question 11

A retail company using Dynamics 365 Finance notices that sales tax is not being calculated correctly on invoices for cross-border transactions. The tax setup includes multiple tax codes and tax groups. What is the most likely cause?

Accepted Answer

Tax codes are not correctly assigned to the items or customers involved.. If tax codes are not assigned to items or customers, the system cannot determine the appropriate tax rate, leading to incorrect calculations. Option B is wrong because the tax authority configuration is about reporting and remittance, not calculation. Option C is wrong because ledger posting groups only affect where tax amounts are posted, not how they are calculated. Option D is wrong because withholding tax is a separate deduction and does not impact sales tax calculation.

Answer

The tax authority is not configured for cross-border transactions.

Answer

The ledger posting group for sales tax is set incorrectly.

Answer

Withholding tax is enabled for the vendor.

Question 12

A company needs to generate financial statements in Dynamics 365 Finance that comply with local regulatory requirements. Which tool should be used to design custom financial reports?

Accepted Answer

Financial reporting (Management Reporter).. Management Reporter (now part of Financial reporting) is the tool for custom financial reports. Option A is wrong because Excel integration via OData is for ad-hoc analysis, not report design. Option B is wrong because Power BI dashboards are for analytics, not custom report design. Option C is wrong because the General ledger inquiry shows data, not reports.

Answer

Excel integration via OData.

Answer

Power BI dashboards.

Answer

General ledger inquiry.

Question 13

A company uses Dynamics 365 Finance and wants to automate the approval of purchase requisitions based on dollar amount and department. What feature should be configured?

Accepted Answer

Workflows.. Workflows in Dynamics 365 Finance allow you to define automated approval processes based on criteria such as dollar amount and department. Option B is incorrect because procurement categories are used to classify items, not to automate approvals. Option C is incorrect because role-based security controls access permissions, not approval flows. Option D is incorrect because budget control monitors spending against budgets, not the approval of purchase requisitions.

Answer

Procurement categories.

Answer

Role-based security.

Answer

Budget control.

Question 14

A company using Dynamics 365 Finance is experiencing performance issues when running month-end close processes. The finance team suspects that the issue is related to the number of open transactions. Which strategy should be used to improve performance?

Accepted Answer

Archive historical transactions and reduce the data volume.. Archiving historical transactions reduces the data volume, which directly addresses the performance issue caused by a high number of open transactions during month-end close. Option A is incorrect because increasing concurrent users would place more load on the system, likely worsening performance. Option B is incorrect because modifying financial reporting to use summary data might improve report generation but does not reduce the volume of open transactions. Option C is incorrect because running processes in batch mode can help with scheduling but does not reduce data volume.

Answer

Increase the number of concurrent users during close.

Answer

Modify the financial reporting to use summary data.

Answer

Run all close processes in batch mode.

Question 15

Which TWO features in Dynamics 365 Finance help organizations comply with regulatory requirements for financial reporting? (Choose two.)

Accepted Answer

Audit trails and change logs.. Options D and E are correct. Audit trails and change logs track changes to financial data, providing transparency required for regulatory compliance. Financial reporting (Management Reporter) enables organizations to create custom reports that meet specific regulatory formats. Option A is incorrect because vendor invoice automation is an operational feature, not directly related to regulatory reporting. Option B is incorrect because payment schedules manage cash flow, not compliance. Option C is incorrect because budget control focuses on spending limits, not reporting requirements.

Answer

Vendor invoice automation.

Answer

Payment schedules.

Answer

Budget control.