MB-920 Describe Dynamics 365 Finance — Timed 30 Questions

Question 1

A company needs to ensure that purchase orders cannot be created without an approved vendor. Which configuration should be used?

Accepted Answer

Set 'Require approval for vendor' to Yes in Procurement and sourcing parameters. Setting 'Require approval for vendor' to Yes in Procurement and sourcing parameters ensures that a purchase order cannot be created unless the vendor is in an approved status. This configuration enforces a prerequisite check at the time of purchase order creation, preventing unapproved vendors from being used.

Answer

Create a purchase order approval workflow

Answer

Enable 'Invoice matching validation'

Answer

Set vendor status to Active

Question 2

A company uses Dynamics 365 Finance. The CFO wants to analyze actuals vs budget across multiple departments and cost centers. Which THREE components must be set up?

Accepted Answer

Budget model. To analyze actuals versus budget across departments and cost centers in Dynamics 365 Finance, you must first create a Budget model (B), which is the container that holds budget register entries and defines the budget type (original, revision, transfer) used for comparison against actuals. Financial dimensions (C) are required because departments and cost centers are represented as dimension values (e.g., Department and CostCenter dimensions), and they provide the axis for slicing budget-versus-actual analysis. A Budget cycle (D) is also mandatory, as it defines the time span (fiscal year or period) over which budget amounts are entered and against which actuals are compared for variance reporting. Budget control configuration (A) is not required for analysis; it is used to enforce spending limits and prevent over-budget postings, which is a control function rather than an analytical one. Budget register entries (E) are transactional data created after the model, dimensions, and cycle exist, so they are not a setup component.

Answer

Budget control configuration

Answer

Budget register entries

Question 3

A company is configuring fixed assets in Dynamics 365 Finance. They need to ensure that asset depreciation is calculated differently for tax reporting and financial reporting. Which TWO actions must be taken?

Accepted Answer

Create multiple value models for the same asset.. Option B is correct because in Dynamics 365 Finance, value models (now called books) are the containers that hold depreciation transactions for an asset, so creating multiple value models for the same asset allows the company to post and track depreciation separately for tax reporting versus financial reporting. Option C is correct because each value model must be linked to its own depreciation profile (which defines the depreciation method, such as straight-line or reducing balance, and the calculation frequency), so separate depreciation profiles per value model are required to produce different depreciation amounts for tax and financial purposes. Option A is incorrect because a single depreciation book/value model cannot simultaneously apply two different depreciation methods or conventions for tax and financial reporting. Option D is incorrect because the Derived value models feature is used to copy transactions from a primary book to a derived book for a different accounting layer, not to independently calculate different depreciation for tax versus financial reporting. Option E is incorrect because a single value model can only be associated with one depreciation profile at a time, so it cannot hold two different depreciation calculations.

Answer

Use a single depreciation book for both tax and financial.

Answer

Enable the 'Derived value models' feature.

Answer

Use a single value model with multiple depreciation profiles.

Question 4

A retail company uses Dynamics 365 Finance. The finance team needs to generate financial statements that comply with local regulatory requirements in multiple countries. Which module should they use?

Accepted Answer

Financial reporting. Correct: Financial reporting is designed to create regulatory-compliant financial statements. Option B (Expense management) manages employee expenses. Option C (Cash and bank management) handles bank transactions. Option D (General ledger) is the core ledger but not for reporting.

Answer

Expense management

Answer

Cash and bank management

Answer

General ledger

Question 5

Which THREE of the following are valid configuration options for posting profiles in Dynamics 365 Finance? (Choose three.)

Accepted Answer

Customer posting profile. In Dynamics 365 Finance, posting profiles are configuration records that define which ledger accounts are used when specific transactions post, and they exist for several modules. Option A, Customer posting profile, is correct because it controls the summary accounts used for customer transactions such as customer balances, liabilities, and revenue recognition in Accounts receivable. Option C, Vendor posting profile, is correct because it defines the summary accounts for vendor transactions like vendor balances and liabilities in Accounts payable. Option E, Inventory posting profile, is correct because it maps inventory transactions (receipts, issues, adjustments) to the appropriate ledger accounts in Inventory management. Option B, Ledger posting setup, is not a posting profile but rather the general ledger account structure and posting configuration for the ledger itself. Option D, Sales tax posting group, is not a posting profile; it is a tax configuration that links sales tax codes to ledger posting accounts for tax transactions.

Answer

Ledger posting setup

Answer

Sales tax posting group

Question 6

Refer to the exhibit. A user in the USMF legal entity tries to post a journal entry in the General ledger for fiscal year 2025 but receives an error. What is the most likely cause based on the exhibit?

Accepted Answer

The period status for 2025 is set to Closed. The error when posting a journal entry in the General ledger for fiscal year 2025 is most likely because the period status for 2025 is set to Closed. In Dynamics 365 Finance, each fiscal period has a status (Open, Closed, On hold, etc.), and if the period is closed, no further postings are allowed. The exhibit likely shows the period status as Closed.

Answer

The module is set to GeneralLedger instead of AccountsPayable

Answer

The legal entity USMF is not configured for general ledger posting

Answer

The fiscal calendar year 2025 is not yet opened

Question 7

Refer to the exhibit. The configuration shows a budget in Dynamics 365 Finance. The budget manager wants to create a revised budget based on the original but cannot modify the existing record. What should they do?

Accepted Answer

Create a new budget scenario for the revision. In Dynamics 365 Finance, budget register entries are tied to a budget model and a budget code, and once a budget register entry is posted or its status is set beyond Draft, it becomes read-only. To create a revised budget without altering the original approved record, the budget manager should create a new budget scenario (a new budget register entry) that references the same budget model but carries the revised amounts. This preserves the audit trail of the original budget while allowing the revision to be tracked separately.

Answer

Change the BudgetStatus to Draft to allow editing

Answer

Delete the existing budget and recreate it with changes

Answer

Modify the BudgetModel to include the changes

Question 8

A manufacturing company uses Dynamics 365 Finance. The finance team notices that the general ledger balances do not match the subledger details for accounts payable. What should you troubleshoot first?

Accepted Answer

Run the 'Troubleshoot GL balance' report in Accounts payable.. In Dynamics 365 Finance, when the general ledger balances do not match the subledger details for accounts payable, the first diagnostic step is to run the 'Troubleshoot GL balance' report (also known as the 'Subledger to general ledger reconciliation' report) in the Accounts payable module. This report identifies discrepancies between subledger journal entries and the corresponding general ledger postings, pinpointing where the imbalance originates. It is the purpose-built reconciliation tool for this exact scenario.

Answer

Check the invoice approval workflow configuration.

Answer

Review the vendor payment settlement process.

Answer

Re-run the payment journal report.

Question 9

An organization is implementing Dynamics 365 Finance and must configure a fiscal calendar that aligns with a 4-4-5 retail calendar. Which approach should they use?

Accepted Answer

Create a custom period template based on the 4-4-5 pattern.. A 4-4-5 retail calendar divides the fiscal year into periods of 4, 4, and 5 weeks, repeating quarterly. Dynamics 365 Finance supports this via custom period templates, where you define the pattern of period intervals (e.g., 4 weeks, 4 weeks, 5 weeks) and generate the fiscal calendar accordingly. Defining fiscal year date intervals alone does not capture the 4-4-5 pattern, and manually adjusting periods each year is error-prone and not a supported best practice.

Answer

Define fiscal year date intervals.

Answer

Use the standard calendar and manually adjust periods each year.

Answer

Use the period close template.

Question 10

Refer to the exhibit. A fixed asset is configured as shown. What is the depreciation amount for the first year (2025) if the company uses a half-year convention?

Accepted Answer

10000.00. The half-year convention in Microsoft Dynamics 365 Finance depreciation means that in the first year of an asset's life, only half of the normal annual depreciation is taken, regardless of the actual acquisition date. Assuming the asset cost is 40,000 and the depreciation rate is 50% (e.g., reducing balance), the full-year depreciation would be 20,000. Under the half-year convention, the first-year depreciation is half of that, i.e., 10,000. Therefore, option B is correct.

Answer

20000.00

Answer

12000.00

Answer

10000.00 (straight-line)

Question 11

Refer to the exhibit. An accounts payable invoice journal is configured as shown. A user posts an invoice for 1000.00 with vendor account V1001. Which account is credited?

Accepted Answer

Default offset account 200110. In an Accounts payable invoice journal, the vendor account V1001 is debited (expense or asset), and the offset account is credited. The 'Default offset account' (200110) is configured as the offset account for the journal, so when posting an invoice, the system credits this account to balance the entry. The vendor balance account is not directly credited in the journal; it is updated in the vendor ledger via the posting profile, but the immediate accounting entry credits the offset account.

Answer

Vendor account V1001

Answer

Expense account

Answer

Vendor balance account

Question 12

A company uses Dynamics 365 Finance. The finance team needs to automate the reconciliation of bank transactions with posted payments. Which feature should they use?

Accepted Answer

Bank reconciliation automation. Bank reconciliation automation allows automatic matching of bank transactions with posted payments. Option A is wrong because advanced bank reconciliation is a manual process. Option B is wrong because payment proposals are for creating payments, not for reconciliation. Option C is wrong because ledger settlements are used for clearing general ledger debits and credits, not for bank reconciliation.

Answer

Advanced bank reconciliation

Answer

Payment proposal

Answer

Ledger settlements

Question 13

A manufacturing company uses Dynamics 365 Finance and Supply Chain Management. The finance department wants to allocate overhead costs to production orders based on machine hours. Which costing method should they configure?

Accepted Answer

Absorption costing. Absorption costing is correct because in Dynamics 365 Finance, it allocates overhead costs to production orders using predetermined rates based on activity drivers like machine hours. Variable costing (A) only includes variable costs, ignoring fixed overhead. Standard costing (B) uses standard rates for cost elements but does not specifically allocate overhead based on machine hours. Job costing (C) tracks costs per individual job or order, not overhead allocation by machine hours.

Answer

Variable costing

Answer

Standard costing

Answer

Job costing

Question 14

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 in Dynamics 365 Finance leverages AI Builder capabilities to perform tasks like invoice matching. AI Builder requires a Power Apps license to be enabled and configured in the environment. Therefore, enabling AI Builder with the appropriate Power Apps license is a prerequisite for AI-powered invoice matching.

Answer

Electronic reporting format for invoices

Answer

Workflow for invoice approval

Answer

Data entities configured for import/export

Question 15

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

Accepted Answer

Budget interval. In Dynamics 365 Finance, budget control requires a budget control rule (E), which defines the dimension values, budget model, and time span that are checked when source documents are posted. A budget interval (A) is also required because it specifies the time period (such as fiscal year, quarter, or month) over which budget funds are aggregated and checked. A budget threshold (C) is required because it defines the percentage or amount at which the system issues warnings or errors when spending approaches or exceeds the available budget. Budget plan templates (B) are used for budget planning workflows, not for budget control configuration, and reporting currency (D) is an accounting setup element unrelated to the required budget control parameters.

Answer

Budget plan template

Answer

Reporting currency

Question 16

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 17

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.. Electronic reporting (ER) in Dynamics 365 Finance uses a country/region context to select the correct ISO 20022 variant and bank-specific validation rules. Germany's Deutsche Bundesbank and many EU banks require the 'DE' country context (or a specific bank-specific context like 'DE_ISO20022') to generate a file that passes validation. If the country context is set to a different locale (e.g., 'US' or left blank), the generated XML will use the wrong namespace, address format, or clearing system codes, causing the bank's validation to fail.

Answer

The model mapping is missing required fields.

Answer

The format name is incorrect for credit transfers.

Answer

The version number is outdated.

Question 18

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 account string 1234567-IT-CC001 is parsed as: main account '1234567' (7 characters, correct), department 'IT' (2 characters, but required 3), and cost center 'CC001' (5 characters, but required 4). The system rejects the entry because the department segment 'IT' does not meet the required length of 3 characters. Although the cost center length is also incorrect, the question asks for the most likely reason, and the department is the first segment that fails validation when parsing left to right.

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 19

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. Advanced bank reconciliation in Dynamics 365 Finance is the feature specifically designed to automate matching of bank statement lines against ledger bank transactions. It imports bank statements (via MT940, BAI2, ISO 20022 camt.053, etc.), applies matching rules, and lets users resolve unmatched items through reconciliation journals. This is the intended tool for automating the reconciliation process rather than performing it manually.

Answer

Cash and bank management

Answer

Advanced bank reconciliation

Answer

Payment journal

Question 20

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.. When budget control is enabled in Dynamics 365 Finance General ledger parameters with the appropriate budget control configuration, any document that would exceed the remaining budget is blocked at posting time and the user receives an error message. The system prevents the transaction from being committed because it violates the configured budget check. This is the default behavior when budget control is active and no override or warning-only setting is applied.

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.