MB-920 Describe Dynamics 365 Finance Practice Test 8 — 15 Questions

Question 1

A company uses Dynamics 365 Finance. They need to track financial dimensions for their cost centers and departments on all transactions. The dimensions must be validated against a list of allowed values, and users should not be able to enter a dimension value that does not exist. What should you configure?

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

Accepted Answer

Create financial dimensions and attach them to a account structure that includes the main account and the dimensions.. To validate financial dimensions against allowed values, the dimensions must be included in an account structure. The account structure links main accounts and financial dimensions, and it enforces that only valid dimension values are used. Dimension sets, budget control, and custom fields do not provide this validation. Therefore, configuring an account structure that includes the dimensions is the correct approach.

Answer

Set up a dimension set and assign it to the legal entity.

Answer

Create a custom field on the general journal and use it to store the dimension values.

Answer

Enable budget control for the dimensions and set the budget threshold to zero.

Question 2

A company is implementing Dynamics 365 Finance. The controller wants to ensure that all transactions entered into the system are recorded in a common format and that financial statements can be generated for multiple legal entities. Which core component should the controller configure first to achieve this?

Accepted Answer

Chart of accounts. The chart of accounts is the foundational component that defines the accounts used to record transactions. It enables a consistent format for data entry and supports financial reporting across legal entities. Other components like fiscal calendars and account structures build upon the chart of accounts, making it the first configuration step.

Answer

Account structures

Answer

Ledger

Answer

Fiscal calendar

Question 3

A company uses Dynamics 365 Finance. The accounts payable manager needs to post vendor invoices that are not yet approved but must be recorded in the general ledger to reflect the liability. Which posting type should the manager use?

Accepted Answer

Invoice journal. The invoice journal posts vendor invoices directly to the general ledger, recording the liability and expense immediately. It is appropriate when invoices are approved or when a simpler posting process is desired. The invoice register and approval journal are used for a two-step process, and the disbursement journal is for payments. Thus, the invoice journal meets the requirement to record the liability for unapproved invoices.

Answer

Vendor disbursement journal

Answer

Invoice approval journal

Answer

Invoice register

Question 4

A company is setting up Dynamics 365 Finance and needs to ensure that all financial transactions are recorded in the functional currency of the legal entity. Which component of the system defines the functional currency?

Accepted Answer

Legal entity configuration. The legal entity configuration is where the accounting currency, which serves as the functional currency, is specified. This setting determines the base currency for all financial transactions and reporting for that legal entity. Other components like the chart of accounts or exchange rate types are supplementary and do not define the functional currency.

Answer

Exchange rate types

Answer

Ledger setup

Answer

Chart of accounts

Question 5

A company uses Dynamics 365 Finance and has a legal entity in the United States and another in the United Kingdom. They need to generate financial statements that comply with each country's accounting standards. The US entity uses GAAP, and the UK entity uses IFRS. Which configuration should they implement to meet this requirement?

Accepted Answer

Configure the ledger with multiple accounting frameworks and assign them to each legal entity.. Configuring multiple accounting frameworks within the ledger allows each legal entity to follow its required standard, such as GAAP or IFRS, while sharing a common chart of accounts. This is the intended feature for multi-GAAP compliance in Dynamics 365 Finance. Other options either duplicate setup or misuse dimensions.

Answer

Use financial dimension sets to tag transactions with the applicable accounting standard.

Answer

Create a secondary ledger for the UK entity and map accounts from the primary ledger.

Answer

Set up separate charts of accounts for each legal entity.

Question 6

A company uses Dynamics 365 Finance. The finance team needs to allocate indirect costs, such as rent and utilities, to multiple departments based on square footage. Which feature should the team use?

Accepted Answer

Ledger allocation rules. Ledger allocation rules distribute amounts from a source account to destination accounts based on a calculation method, such as a percentage or a fixed weight. They are specifically designed for allocating indirect costs like rent and utilities across departments. Financial dimensions tag transactions, cost accounting is a separate module, and budget control checks fund availability. Therefore, ledger allocation rules are the correct feature.

Answer

Cost accounting allocation

Answer

Budget control

Answer

Financial dimensions

Question 7

A company uses Dynamics 365 Finance and wants to automate the creation of payment proposals for vendor payments. They need to ensure that vendors with a high risk rating are excluded from automatic payment runs. Which feature should they configure?

Accepted Answer

Payment proposal criteria. Payment proposal criteria is the correct feature because it allows you to filter the invoices included in a payment proposal based on various fields, including vendor risk rating. By setting a criterion to exclude high-risk vendors, the automatic payment run will skip their invoices. This meets the requirement to exclude them from automatic payments.

Answer

Vendor blocking

Answer

Vendor risk assessment

Answer

Payment schedule

Question 8

A company is setting up Dynamics 365 Finance and needs to configure the general ledger. They want to ensure that transactions are posted to the correct accounts and that financial reports can be generated for different periods. Which two components are required to achieve this? (Choose two.)

Accepted Answer

Chart of accounts. The chart of accounts and fiscal calendar are fundamental for general ledger setup. The chart of accounts enables transaction classification, while the fiscal calendar defines reporting periods. Together, they allow accurate posting and period-based financial reporting. Other components like account structures and dimension sets enhance functionality but are not strictly required for basic operation.

Answer

Account structures

Answer

Financial dimension sets

Answer

Advanced rules

Question 9

A company uses Dynamics 365 Finance and needs to track multiple dimensions on transactions. The controller wants to ensure that when a user enters a main account, the system automatically suggests default dimension values based on the main account. Which two configurations are required to achieve this? (Choose two.)

Accepted Answer

Set up a default dimension on the main account.. To automatically suggest default dimension values based on the main account, two configurations are necessary: setting up a default dimension on the main account and ensuring that the dimension is included in the account structure. The default dimension on the main account defines which value to suggest, and the account structure makes that dimension available for entry, enabling the system to apply the default.

Answer

Enable 'Dimension validation' on the account structure.

Answer

Set up a dimension hierarchy for the dimension.

Answer

Create a dimension set that includes the main account and the dimension.

Question 10

A Dynamics 365 Finance user needs to see a real-time summary of key financial metrics such as cash balance, total revenue, and outstanding payables on a single page. Which feature should the user access?

Accepted Answer

Financial performance workspace. The Financial performance workspace is a built-in Dynamics 365 Finance workspace that summarizes critical financial indicators such as cash position, revenue, and outstanding payables. It pulls data from various subledgers and the general ledger, providing a real-time overview. This allows finance users to monitor performance without navigating multiple reports or modules.

Answer

General ledger workspace

Answer

Financial insights dashboard

Answer

Cash overview workspace

Question 11

A company is implementing Dynamics 365 Finance and needs to configure the general ledger to support multiple currencies. They want to record transactions in a foreign currency and automatically calculate realized gains and losses when payments are settled. Which two configurations are required? (Choose two.)

Accepted Answer

Set up an exchange rate type and assign it to the legal entity.. To record foreign currency transactions and automatically calculate realized gains/losses on settlement, you must set up an exchange rate type and assign it to the legal entity, and you must configure the realized gain and loss accounts in the Currency parameters. These two configurations enable the system to convert currencies and post the difference upon settlement.

Answer

Enable the Foreign currency revaluation parameter in the General ledger parameters.

Answer

Create a foreign currency revaluation simulation before posting.

Answer

Configure ledger accounts for unrealized gain and loss.

Question 12

A company uses Dynamics 365 Finance to manage its financial operations. The controller needs to ensure that when a purchase order is created for a specific department, the system automatically posts the expense to the correct financial dimension without manual entry. The company has already set up financial dimensions and dimension values. What should the controller configure to achieve this?

Accepted Answer

Create a dimension rule that uses the purchasing department as the source for the Department dimension.. Dimension rules are used to derive financial dimension values from source data, such as the purchasing department, ensuring accurate coding without manual intervention. This is the correct approach because it dynamically assigns the department based on the transaction context, rather than relying on static defaults or validation-only account structures.

Answer

Set up an account structure that includes the Department dimension and link it to the main account.

Answer

Configure a financial dimension default template and assign it to the vendor record.

Answer

Enable budget control for the Department dimension and set a default value in the budget register entry.

Question 13

A company uses Dynamics 365 Finance to manage its fixed assets. The accounting manager notices that a newly acquired vehicle was depreciated using the straight-line method, but the company policy requires the reducing balance method for vehicles. The manager needs to change the depreciation method for this asset without affecting other assets. What should the manager do?

Accepted Answer

Create a new depreciation book and assign it to the asset. Creating a new depreciation book with the reducing balance method and assigning it to the vehicle allows the depreciation method to be changed for that asset only. Depreciation books in Dynamics 365 Finance are designed to support multiple methods per asset, so this approach maintains accurate records and policy compliance without affecting other assets.

Answer

Delete the asset and re-create it with the correct method

Answer

Modify the existing depreciation book's method for all assets

Answer

Manually adjust the accumulated depreciation via a journal entry

Question 14

A company uses Dynamics 365 Finance. They need to track financial dimensions for their cost centers and departments on all transactions. The dimensions must be validated against a list of allowed values, and users should not be able to enter a dimension value that does not exist. What should you configure?

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

Accepted Answer

Reversing entry journal. The reversing entry journal is purpose-built to generate an automatic offsetting entry on a specified reversal date. By setting the reversal date on the journal, the system posts the original entry and then automatically creates the reversal in the next period. This eliminates manual intervention and ensures the reversal is recorded in the correct accounting period.

Answer

Periodic journal

Answer

Accrual journal

Answer

Allocation journal

Question 15

A Dynamics 365 Finance user needs to enter a journal entry that reverses automatically in the next period. The company requires that the reversal occurs on the first day of the following month. Which journal type should the user select?

Accepted Answer

Reversing journal. The reversing journal type is the correct choice because it allows the user to specify a reversal date, and the system automatically creates the reversing entry on that date. This is ideal for accruals or deferrals that need to be reversed in the next period. Other journal types do not have this built-in automatic reversal capability.

Answer

Allocation journal

Answer

Accrual journal

Answer

Daily journal