MB-920 Describe Dynamics 365 Finance Practice Test 7 — 15 Questions

Question 1

A manufacturing company uses Dynamics 365 Finance. The finance team needs to automate the calculation of monthly depreciation for fixed assets that are acquired mid-month. Which depreciation method should be configured to ensure proportional depreciation is applied based on the number of days the asset was in service during the first month?

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

Accepted Answer

Straight line service life. The Straight line service life depreciation method in Dynamics 365 Finance calculates depreciation evenly over the asset's useful life and supports proportional (daily) depreciation for the first and last periods. This means an asset acquired mid-month is depreciated only for the days it was actually in service during that month, satisfying the requirement for proportional first-month depreciation.

Answer

Reducing balance

Answer

Declining balance

Answer

Half year convention

Question 2

A multinational corporation uses Dynamics 365 Finance with multiple legal entities. The company needs to streamline the intercompany reconciliation process. They want to automatically generate balancing journal entries when transactions are posted between entities. Which configuration should be used to meet this requirement?

Accepted Answer

Configure intercompany accounting setup. To meet the requirement of automatically generating balancing journal entries when transactions are posted between entities, you need to configure intercompany accounting setup. This setup defines the rules for automatic balancing entries. Option A (Define intercompany transaction pairs) is used for matching intercompany transactions but does not automatically generate balancing entries. Option B (Use intercompany journal posting) is a manual process, not automatic. Option D (Set up consolidation groups) is for consolidating financial statements, not for automatic balancing. Therefore, Option C is correct.

Answer

Define intercompany transaction pairs

Answer

Use intercompany journal posting

Answer

Set up consolidation groups

Question 3

A company uses Dynamics 365 Finance to manage asset lifecycle. They want to track maintenance costs and schedule preventive maintenance. Which TWO modules should be used?

Accepted Answer

Asset management. Option C (Asset management) is correct because it is the Dynamics 365 Finance module that provides preventive maintenance scheduling, maintenance work orders, and tracking of maintenance costs for assets throughout their lifecycle. Option E (Fixed assets) is correct because it maintains the financial records of assets, including acquisition, depreciation, and cost tracking, which complements maintenance cost tracking. Option A (Budgeting) only handles budget planning and control, not maintenance scheduling or asset cost tracking. Option B (Procurement and sourcing) manages purchasing and vendor transactions but does not schedule preventive maintenance. Option D (Project management and accounting) tracks project costs and revenues, not asset maintenance or fixed asset records.

Answer

Budgeting

Answer

Procurement and sourcing

Answer

Project management and accounting

Question 4

A financial analyst runs the above export job but notices that the exported file contains entries from 2024 as well. What is the most likely cause?

Accepted Answer

The filter field name 'AccountingDate' does not match the source data field name. The filter uses 'AccountingDate ge 2025-01-01' which should filter from Jan 1, 2025, but the filter might not be applied correctly due to the source data format being CSV, which may cause date format interpretation issues. However, the exhibit shows the filter is set correctly. The most likely cause is that the filter is not applied because the data source format is CSV and the filter may use a different date format. But among options, the filter expression is case-sensitive and 'ge' is correct. Actually, the filter should work. The issue might be that the filter is not being applied because the job was run without filter. But the exhibit shows filter present. Option C is most plausible: the filter uses 'AccountingDate' but the field might be 'TransactionDate' in the source. Option D is also possible. However, the typical mistake is that the filter field name does not match. I'll go with C: The filter field name is incorrect.

Answer

The filter condition is case-sensitive and should be 'GE'

Answer

The export format should be XML instead of CSV

Answer

The export job needs to be run with the 'Apply filter' option enabled

Question 5

You are a Dynamics 365 Finance consultant for a medium-sized manufacturing company that recently implemented Dynamics 365 Finance. The company uses the perpetual inventory system with standard cost. They have encountered an issue where the inventory value in the general ledger does not match the inventory value in the inventory module. After investigation, you discover that some purchase order receipts were posted directly to the general ledger without updating inventory quantities. The CFO wants to ensure that inventory financial postings are always synchronized with inventory transactions. The company uses batch processing for inventory closing. They need a solution that prevents discrepancies in the future. Requirements: 1) Ensure that all inventory transactions update both inventory quantities and financial postings. 2) Minimize manual intervention. 3) Use existing Dynamics 365 Finance features. Which course of action should you recommend?

Accepted Answer

Enable the 'Post inventory to General ledger' parameter in Inventory and warehouse management parameters, and ensure that the 'Inventory closing' batch job runs regularly.. Enabling the 'Post inventory to general ledger' parameter in Inventory and warehouse management parameters ensures that all inventory transactions automatically update both inventory quantities and financial postings. Running the 'Inventory closing' batch job regularly recalculates inventory costs and corrects discrepancies, minimizing manual intervention. This uses existing Dynamics 365 Finance features and prevents future discrepancies. Option A requires manual comparison and adjusting entries, which introduces manual intervention and does not prevent discrepancies proactively. Option C changes the costing method but does not address the synchronization issue; standard cost can work with proper posting. Option D also relies on manual correction and does not prevent future discrepancies.

Answer

Create a recurring batch job that compares inventory value in the inventory module to GL and posts adjusting entries.

Answer

Set the 'Inventory model' to 'FIFO' instead of 'Standard cost'.

Answer

Use the 'Inventory recalculation' report monthly and manually correct discrepancies.

Question 6

You are a Dynamics 365 Finance functional consultant for a global retail chain that operates in multiple countries. The company uses Dynamics 365 Finance with a shared service center for accounts payable. They have a requirement to automatically route vendor invoices for approval based on the invoice amount and the vendor's credit limit. Invoices below $10,000 should be automatically approved if the vendor's credit limit is sufficient. Invoices above $10,000 must be approved by a manager. Additionally, invoices from new vendors must always be reviewed by the procurement team. The company uses the Vendor invoice automation feature. Requirements: 1) Automate invoice processing to reduce manual effort. 2) Ensure compliance with approval policies. 3) Use standard Dynamics 365 Finance configurations. Which configuration should you implement?

Accepted Answer

Create a vendor invoice workflow with conditional approvals based on amount and vendor status.. A vendor invoice workflow supports conditional approvals based on invoice amount and vendor status (e.g., credit limit, new vendor). This meets the requirement to automatically approve low amounts when credit is sufficient, route high amounts to a manager, and send new vendor invoices to procurement. Option A is incorrect because the Vendor invoice automation policy only auto-posts invoices without approval logic, which does not handle the conditional routing required. Option B is incorrect because the vendor invoice policy in Procurement and sourcing is used for defining approval thresholds but not for dynamic routing based on vendor status. Option C is incorrect because a payment hold rule only prevents payment, not invoice approval, and does not address amount-based routing. Therefore, D is the only option that fully satisfies the requirements using standard Dynamics 365 Finance configurations.

Answer

Use the Vendor invoice automation policy to automatically post invoices under $10,000 without approval.

Answer

Configure a vendor invoice policy in the Procurement and sourcing module.

Answer

Set up a payment hold rule for invoices from new vendors.

Question 7

You are a Dynamics 365 Finance administrator for a company that needs to generate financial reports in compliance with local GAAP. The company has multiple legal entities and wants to consolidate financial data into a single reporting entity. They also need to support multiple currencies and translation adjustments. The CFO wants to use a standard tool that integrates with Dynamics 365 Finance. Requirements: 1) Consolidate financial data from multiple legal entities. 2) Support currency translation. 3) Use a built-in tool. Which feature should you recommend?

Accepted Answer

Use the Consolidations module with currency translation settings.. The Consolidations module in Dynamics 365 Finance is the built-in tool designed to combine financial data from multiple legal entities into a single consolidated legal entity. It natively supports currency translation and translation adjustments, which are required for GAAP-compliant consolidated reporting across entities using different currencies.

Answer

Set up Budgeting with exchange rates.

Answer

Use Financial reporting with row definitions that sum across companies.

Answer

Configure Intercompany accounting to post balancing entries.

Question 8

You are a Dynamics 365 Finance system administrator for a large manufacturing company. The company uses the 'Standard cost' inventory model and performs periodic inventory closing to recalculate standard costs. Recently, the finance team noticed that the inventory closing process is taking too long and sometimes fails, causing delays in month-end closing. They need to optimize the inventory closing process. The company has millions of inventory transactions per month. Requirements: 1) Reduce inventory closing processing time. 2) Ensure data integrity. 3) Use available Dynamics 365 Finance features. Which approach should you recommend?

Accepted Answer

Enable 'Use inventory close parallel processing' and schedule the closing batch job during off-peak hours.. Enabling 'Use inventory close parallel processing' allows Dynamics 365 Finance to split the inventory closing workload across multiple threads, dramatically reducing processing time for high-volume transaction environments. Scheduling the closing batch job during off-peak hours further optimizes resource availability and avoids contention with other month-end processes. Together, these directly address the requirements to reduce processing time while maintaining data integrity using built-in features.

Answer

Switch to 'Moving average' inventory model to avoid closing.

Answer

Archive old inventory transactions to reduce data volume.

Answer

Run the 'Inventory recalculation' report instead of the closing process.

Question 9

You are a Dynamics 365 Finance consultant for a startup that needs to manage its financial operations. The company has a small accounting team and wants to automate bank reconciliation. They use multiple bank accounts and receive electronic bank statements in CSV format. Requirements: 1) Automatically import bank statements. 2) Match transactions automatically. 3) Use standard Dynamics 365 Finance features. Which configuration should you implement?

Accepted Answer

Configure a bank statement import source and define matching rules for automatic reconciliation.. Dynamics 365 Finance ships with a native bank statement import framework that supports CSV, ISO20022, and BAI2 formats, and the Advanced bank reconciliation module lets you define matching rules so imported statement lines are auto-matched to ledger transactions. Configuring an import source plus matching rules satisfies all three requirements — automatic import, automatic matching, and use of standard features — without custom development. This is the out-of-box path Microsoft documents for exactly this scenario.

Answer

Create a data entity to import bank statements and use Excel to reconcile.

Answer

Use the 'Advanced bank reconciliation' feature with manual matching.

Answer

Enable the 'Bank reconciliation' workspace and manually enter statement lines.

Question 10

Your organization is configuring Accounts payable in Dynamics 365 Finance. You need to set up vendor posting profiles. Which THREE components are part of a vendor posting profile?

Accepted Answer

Summary account. In Dynamics 365 Finance, a vendor posting profile is defined by the combination of a posting profile ID and an account code/group, and for each valid combination you must specify the ledger accounts used when posting vendor transactions. Option A (Summary account) is correct because the summary account is the main ledger account used to post the vendor balance for the specified account code/group. Option B (Discount account) is correct because the discount account holds the ledger account for cash discounts taken on vendor payments. Option C (Settlement account) is correct because the settlement account is used to post the offsetting entry when vendor transactions are settled, such as during payment or settlement of invoices. Options D (Inventory account) and E (Accounts receivable account) are not part of a vendor posting profile: inventory accounts are configured in item posting setups or inventory posting profiles, and accounts receivable accounts belong to customer posting profiles, not vendor posting profiles.

Answer

Inventory account

Answer

Accounts receivable account

Question 11

You are a financial analyst at Fabrikam Inc., a retail company using Dynamics 365 Finance. The company has a requirement to track expenses by department and project. Currently, the chart of accounts uses a single segment for main accounts. The CFO wants to add cost centers and projects as financial dimensions to provide more granular reporting. You need to configure financial dimensions without disrupting existing transactions. You also need to ensure that new dimensions are available for budgeting. What should you do?

Accepted Answer

Create new financial dimensions for cost center and project, activate them, and set up budget models to use these dimensions.. Creating new financial dimensions for cost center and project, activating them, and configuring budget models to include these dimensions satisfies all requirements: granular reporting, no disruption to existing transactions (existing dimensions remain), and availability for budgeting. Financial dimensions in Dynamics 365 Finance are created and activated independently, and budget models can reference them.

Answer

Create new financial dimensions, activate them, and require dimension values on all journal entries. Then deactivate old dimension values.

Answer

Create new financial dimensions, then configure posting restrictions so that only existing dimension combinations are allowed.

Answer

Create new financial dimensions for cost center and project, then set them as default dimensions on the main account.

Question 12

You are the finance controller at Contoso Ltd., a service company that uses Dynamics 365 Finance for project accounting. The company has multiple ongoing projects, each with a budget. The project managers need to track actual costs against budget in real time. They also need to be able to forecast future costs and revenue for each project. The CFO wants to use the Project budget feature to control costs. You need to configure the system to meet these requirements. What should you do?

Accepted Answer

Set up project budgets with budget control, and use project forecasts to predict future costs and revenue.. Project budgets with budget control allow tracking actual costs against budget in real time, and project forecasts enable prediction of future costs and revenue. Option A is incorrect because while creating project budgets with budget control tracks costs, using expense journals does not provide the forecasting capability needed. Option B is incorrect because fixed-price projects are not suitable for flexible forecasting; they have a predetermined total price, not ongoing cost forecasting. Option D is incorrect because work breakdown structures are for task management, not for budget control or forecasting.

Answer

Create project budgets using the project budget control feature, and use expense journals to post costs.

Answer

Set up each project as a fixed-price project and use the project budget control feature to track costs.

Answer

Create a work breakdown structure for each project and use the project budget control feature to monitor costs.

Question 13

You are a Dynamics 365 Finance administrator for a company that needs to manage fixed assets. The company purchases assets frequently and wants to automate the creation of fixed assets from purchase orders. When a purchase order for a fixed asset is invoiced, the system should automatically create a fixed asset record and post the acquisition cost. What should you configure?

Accepted Answer

On the purchase order line, set the 'Fixed asset acquisition' type, and enable automatic fixed asset creation in Fixed assets parameters.. In Dynamics 365 Finance, you enable automatic fixed asset creation by setting the purchase order line's item type to 'Fixed asset' (with the Fixed asset acquisition transaction type) and turning on the corresponding option in Fixed assets parameters. When the PO is invoiced, the system creates the fixed asset record and posts the acquisition cost automatically.

Answer

Use the asset inventory module to track assets and post acquisition costs to a general ledger account.

Answer

Create fixed assets manually from the Fixed assets module and post the acquisition using a fixed asset journal.

Answer

Set up integration between Dynamics 365 Finance and Dynamics 365 Asset Management to automatically create assets.

Question 14

You are the finance manager for a company that uses Dynamics 365 Finance. The company has a requirement to process recurring invoices for subscription services. The finance team wants to automate the generation of recurring invoices at the beginning of each month. The recurring invoices should be based on a template that includes predefined line items and amounts. You need to configure the system to automate this process. What should you do?

Accepted Answer

Create a recurring invoice template with the subscription items, and set up a recurring invoice batch job to generate invoices on the first day of each month.. Dynamics 365 Finance provides a dedicated 'Recurring invoices' feature that lets you define a template with predefined line items, amounts, and a recurrence schedule, then generate invoices automatically via a batch job. Option C correctly describes creating that recurring invoice template and scheduling the batch job to run on the first of each month, which is exactly the supported mechanism for subscription-style recurring billing.

Answer

Create a credit note template and use the 'Generate recurring credit notes' batch job to offset invoices.

Answer

Create free text invoice templates and use the 'Generate recurring invoices' batch job to create them on a schedule.

Answer

Create sales order templates and use the 'Create recurring orders' batch job to generate sales orders each month.

Question 15

You are the Dynamics 365 Finance administrator for a multinational manufacturing company, Contoso Ltd. The company operates in three legal entities: Contoso US (US), Contoso Germany (DE), and Contoso Japan (JP). Contoso US is the primary legal entity and consolidates all intercompany transactions. The CFO requires a consolidated financial report that includes actuals and budget data from all legal entities. The company uses shared data tables for customers and vendors across all legal entities. However, each legal entity maintains its own chart of accounts and fiscal calendars. The company recently implemented Dynamics 365 Finance and needs to set up consolidation to meet the CFO's requirements. You need to configure the consolidation process. Which course of action should you take?

Accepted Answer

Set up a separate consolidation legal entity and use the Consolidate online process to transfer balances from all subsidiaries.. In Dynamics 365 Finance, when legal entities use different charts of accounts and fiscal calendars, the recommended approach is to create a separate consolidation legal entity and use the Consolidate online process. This method transfers balances from each subsidiary into the consolidation company, allowing account mapping and period adjustments to produce a unified consolidated report. Option B (Consolidate with import) is designed for importing data from external sources, not for consolidating existing Dynamics 365 legal entities. Option A is too manual and error-prone for ongoing needs. Option D is incorrect because the General ledger consolidation process must be run in the consolidation company, not directly in Contoso US.

Answer

Export financial data from each legal entity to Excel and manually create consolidated reports.

Answer

Use the Consolidate with import process to bring data from each subsidiary into Contoso US.

Answer

Run the General ledger consolidation process directly in the Contoso US legal entity to include subsidiaries.