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

Question 1

An organization uses Dynamics 365 Finance for project accounting. They need to bill a customer for a fixed-price project based on a milestone schedule. Which billing method should be used?

Accepted Answer

Fixed-price milestone. Time and material bills actual hours. Fixed-price milestone bills based on predefined milestones. Progress billing is for percentage complete. Cost plus bill is for cost plus contracts.

Answer

Cost plus

Answer

Progress billing

Answer

Time and material

Question 2

A company uses Dynamics 365 Finance. Which TWO features are available in the Cash and Bank Management module?

Accepted Answer

Cash flow forecasting. Bank reconciliation and cash flow forecasting are part of Cash and Bank Management. Fixed assets management is in Fixed assets. Budget control is in Budgeting. Vendor payments are in Accounts payable.

Answer

Vendor payments

Answer

Budget control

Answer

Fixed asset management

Question 3

A company uses Dynamics 365 Finance to manage intercompany transactions. Which THREE steps are required to set up intercompany accounting?

Accepted Answer

Define intercompany partners. You must define intercompany partners, set up elimination rules, and configure intercompany accounting sequences. Creating a consolidation company is a separate process. Setting up budget models is unrelated.

Answer

Create a consolidation company

Answer

Set up budget models

Question 4

A company uses Dynamics 365 Finance. Which TWO types of financial dimensions can be created?

Accepted Answer

Entity-backed dimensions. Custom dimensions are user-defined. Entity-backed dimensions are based on system entities like Cost centers. Fixed dimensions are not a type; they are default dimension values. Main account is an account, not a dimension. Budget dimensions are a concept, not a type.

Answer

Main account

Answer

Fixed dimensions

Answer

Budget dimensions

Question 5

Refer to the exhibit. A finance manager reviews the budget control configuration in Dynamics 365 Finance. The OverBudgetOption is set to 'WarnOnly'. What will happen when a user attempts to post an expense that exceeds the remaining budget?

Accepted Answer

The user will receive a warning but can still post the expense.. The OverBudgetOption 'WarnOnly' allows posting with a warning. 'Block' prevents posting. 'None' disables control. The configuration shows BudgetControlEnabled=true, so control is active.

Answer

The expense will be posted without any warning.

Answer

The expense will be blocked and cannot be posted.

Answer

The budget control will be ignored because OverBudgetOption is set.

Question 6

Refer to the exhibit. A journal entry in Dynamics 365 Finance shows a debit to account 1100-001-01 and offset to account 2100-002-02. The financial dimensions include Department=Sales and CostCenter=CC001. What is the purpose of this entry?

Accepted Answer

Increasing cash and increasing a liability. Account 1100 is typically Cash (asset). Account 2100 is typically Accounts Payable (liability). Debiting Cash and crediting AP does not make sense for payment. A debit to Cash (increase) and credit to AP (increase) is unusual; more likely it's a receipt from a vendor refund. But typical: debit Cash, credit AP means receiving cash and reducing liability? Actually debit Cash increases, credit AP increases liability. That would be a loan or refund. Option D matches: increasing cash and increasing liability (e.g., receiving a deposit).

Answer

Recording a customer payment

Answer

Recording a vendor payment

Answer

Reclassifying a bank transaction

Question 7

Refer to the exhibit. A sales order in Dynamics 365 Finance has a line discount of 10% and a header discount of 5%. What is the net amount for the line item after both discounts?

Accepted Answer

$1,282.50. First apply line discount: 10 * 150 = 1500, minus 10% = 1350. Then apply header discount: 1350 minus 5% = 1282.50.

Answer

$1,500.00

Answer

$1,425.00

Answer

$1,350.00

Question 8

A company is implementing Dynamics 365 Finance and needs to configure a chart of accounts that supports multiple legal entities with different fiscal year requirements. What should the administrator do to ensure each legal entity can have its own fiscal calendar while sharing the main accounts?

Accepted Answer

Configure shared main accounts and assign a separate fiscal calendar to each legal entity.. Option A is correct because Dynamics 365 Finance allows sharing main accounts across legal entities while each legal entity can be assigned a separate fiscal calendar. Option B is wrong because each legal entity must have its own fiscal calendar; they cannot share one if they have different fiscal years. Option C is wrong because each legal entity must have its own chart of accounts if they have different fiscal calendars; sharing the main accounts is allowed but the chart of accounts structure can be shared, but fiscal calendar is per legal entity. Option D is wrong because fiscal calendars are set per legal entity, not per main account.

Answer

Assign a fiscal calendar to each main account.

Answer

Create a single fiscal calendar and share it across all legal entities.

Answer

Create a separate chart of accounts for each legal entity.

Question 9

A manufacturing company uses Dynamics 365 Finance. The finance team notices that the 'Work in process' (WIP) account balances are not clearing correctly after production orders are completed. The production orders use the 'Standard cost' costing method. What is the most likely cause of this issue?

Accepted Answer

The production order variances have not been calculated and posted.. Option C is correct because if variances are not calculated and posted, the WIP account will not clear properly. Option A is wrong because BOM version approval affects costing but not WIP clearing. Option B is wrong because item coverage settings affect planning, not accounting. Option D is wrong because a single cost category record does not prevent WIP clearing.

Answer

The bill of materials (BOM) version is not approved.

Answer

The cost category for the production route is set to 'Indirect cost' instead of 'Direct'.

Answer

The item coverage group is set to 'Period' instead of 'Requirement'.

Question 10

A company is setting up Dynamics 365 Finance for the first time. The system administrator needs to create a fiscal calendar that starts on July 1 and ends on June 30 of the following year. Which type of fiscal year should the administrator select?

Accepted Answer

July through June. Option B is correct because a fiscal year from July to June is a 'July through June' fiscal year. Option A is wrong because 'Calendar year' is January to December. Option C is wrong because 'April through March' is a different period. Option D is wrong because 'October through September' is another fiscal year variant.

Answer

October through September

Answer

Calendar year

Answer

April through March

Question 11

A company uses Dynamics 365 Finance and wants to automate the generation of vendor payments for approved invoices that are due within the next seven days. The payment proposal should include invoices from all vendors. What is the best way to configure this?

Accepted Answer

Create a payment proposal with a 'Due by' date filter set to seven days from today.. Option A is correct because a payment proposal with a 'Due by' date filter will select invoices due within that period. Option B is wrong because a payment schedule is for recurring payments, not for due date filtering. Option C is wrong because a payment journal is used to post payments but does not automatically select invoices. Option D is wrong because a vendor payment retention is for holding payments, not for selecting due invoices.

Answer

Configure a payment schedule for each vendor.

Answer

Set up a vendor payment retention for each invoice.

Answer

Use the 'Payment journal' to manually select invoices.

Question 12

A company using Dynamics 365 Finance notices that the 'General ledger' trial balance does not match the subledger balances for accounts payable. The discrepancy appears only for a specific vendor. What is the most likely cause?

Accepted Answer

An invoice for the vendor is in 'Pending' status and has not been posted.. Option C is correct because a single unposted invoice would cause a discrepancy for that vendor. Option A is wrong because vendor currency affects exchange rates, not posting status. Option B is wrong because a payment journal being deleted would affect cash, not the AP subledger. Option D is wrong because vendor hold affects future transactions, not existing balances.

Answer

A payment journal was deleted after posting.

Answer

The vendor account is on hold.

Answer

The vendor's currency is different from the company's accounting currency.

Question 13

A company is configuring Dynamics 365 Finance for a new subsidiary. The subsidiary uses a different currency than the parent company. What must be set up to enable translation of the subsidiary's financial statements to the parent's reporting currency?

Accepted Answer

Exchange rates. Option B is correct because exchange rates are required for currency translation. Option A is wrong because currency revaluation is for adjusting balances, not for translation. Option C is wrong because a consolidation company is used to combine results, but translation requires exchange rates. Option D is wrong because intercompany accounting is for transactions between entities, not for translation.

Answer

Currency revaluation

Answer

Consolidation company

Answer

Intercompany accounting

Question 14

A company uses Dynamics 365 Finance and wants to use Copilot to assist with financial analysis. Which task can Copilot perform in Dynamics 365 Finance?

Accepted Answer

Generate a cash flow forecast report.. Option D is correct because Copilot can generate financial reports and insights. Option A is wrong because Copilot cannot post transactions automatically; it assists users. Option B is wrong because Copilot cannot configure system parameters. Option C is wrong because Copilot cannot run batch jobs directly.

Answer

Configure system parameters for the General ledger.

Answer

Run batch jobs for period-end closing.

Answer

Automatically post all pending invoices.

Question 15

A company uses Dynamics 365 Finance and has enabled the 'Budget control' feature. Users report that they cannot post purchase requisitions even though sufficient budget is available. What is the most likely cause?

Accepted Answer

Budget register entries have not been created for the current fiscal year.. Option B is correct because if budget control is enabled but the budget register entries have not been created, there is no budget to control against. Option A is wrong because user permissions affect access, not budget control. Option C is wrong because budget control configuration works with budget register entries. Option D is wrong because budget control can be enabled for purchase requisitions.

Answer

Users do not have permission to post purchase requisitions.

Answer

Budget control is disabled for the legal entity.

Answer

Budget control is configured to check only purchase orders.