MB-920 Describe Dynamics 365 Finance — Timed 40 Questions

Question 1

A company's finance team reports that in the general ledger, the balance for the 'Office Supplies' account shows a credit balance of $500, but they expected a debit balance. What is the most likely cause of this discrepancy?

40 minute time limit — choose an answer to begin.

Accepted Answer

A voucher was posted with the wrong debit/credit sign. In Dynamics 365 Finance, the general ledger account for 'Office Supplies' is an expense account, which normally carries a debit balance. A credit balance indicates that a voucher was posted with the wrong debit/credit sign, such as entering a negative amount or selecting the wrong account type during transaction entry. This is the most common cause of a balance sign reversal in an expense account.

Answer

The period close process was run without finalizing

Answer

A reversing entry was posted incorrectly

Answer

A financial dimension was incorrectly assigned

Question 2

A company uses Dynamics 365 Finance and needs to ensure that all vendor invoices are approved by the department manager before payment. Which feature should they use?

Accepted Answer

Configure vendor invoice workflows. Vendor invoice workflows in Dynamics 365 Finance allow you to define a business process that routes invoices for approval based on specific conditions, such as department manager approval. This feature ensures that invoices are reviewed and approved before payment is processed, meeting the requirement for managerial approval.

Answer

Set up payment schedules

Answer

Enable invoice matching validation

Answer

Create purchase order approval workflows

Question 3

A company using Dynamics 365 Finance notices that the trial balance does not balance because the 'Accounts Payable' account has a negative balance. What could be the reason?

Accepted Answer

A vendor payment was posted to the wrong vendor account. A negative balance in the Accounts Payable account typically indicates that credits (payments) exceed debits (invoices) for a vendor. Posting a vendor payment to the wrong vendor account creates a credit balance in the intended vendor's subledger without a corresponding invoice, causing the trial balance to be out of balance because the general ledger account reflects the payment but the subledger detail is misaligned.

Answer

A prepayment invoice was posted without a purchase order

Answer

Intercompany transactions were posted incorrectly

Answer

A bank reconciliation was not performed

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 TWO of the following are features of Dynamics 365 Finance that support compliance with regulatory requirements? (Choose two.)

Accepted Answer

Financial reporting. Correct answers are A and B. Financial reporting in Dynamics 365 Finance helps generate reports that comply with regulatory standards like GAAP or IFRS. Audit trail and change log track all changes to financial data, ensuring transparency and supporting audit requirements. Options C, D, and E are not primarily compliance features: Vendor collaboration focuses on procurement processes, Expense management handles employee expenses, and Cash flow forecasting is for planning.

Answer

Vendor collaboration

Answer

Expense management

Answer

Cash flow forecasting

Question 6

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 7

A manufacturing company uses Dynamics 365 Finance and Operations. The finance team needs to ensure that all vendor invoices are approved by a manager before payment. What feature should be configured to enforce this approval workflow?

Accepted Answer

Vendor invoice workflow. The vendor invoice approval workflow in Dynamics 365 Finance enforces manager approval before payment. Option A is wrong because budget control manages budget funds, not invoice approval. Option C is wrong because the financial journal workflow is for journal entries, not vendor invoices. Option D is wrong because vendor collaboration is for external vendors to submit invoices, not approval.

Answer

Budget control configuration

Answer

Financial journal workflow

Answer

Vendor collaboration workspace

Question 8

A manufacturing company uses Dynamics 365 Finance to manage its financial operations. The finance team notices that intercompany transactions are not being settled automatically as expected. What should you check first to resolve this issue?

Accepted Answer

Ensure the intercompany setup is correctly configured with appropriate settlement parameters.. Intercompany settlement requires a correct intercompany setup with appropriate parameters, such as settlement priority and rules. Option A is wrong because vendor posting profiles affect vendor transactions, not intercompany settlement. Option B is wrong because ledger allocation rules are for allocating amounts, not settling transactions. Option D is wrong because budget control is unrelated to intercompany settlement.

Answer

Review the vendor posting profiles.

Answer

Verify the ledger allocation rules.

Answer

Check the budget control configuration.

Question 9

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.. 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 vendor payment retention is used to hold payments, not to select invoices based on due dates. Option D is wrong because the payment journal is used to manually select and post payments, not to automatically generate a payment proposal.

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 10

Refer to the exhibit. The JSON snippet shows a main account configuration in Dynamics 365 Finance. Based on this configuration, which of the following is true about this account?

Accepted Answer

It has a debit balance of 100,000.. The opening balance is 100,000 and the account is a debit account (Asset type), so it has a debit balance of 100,000. Option B is incorrect because asset accounts default to debit posting, not credit. Option C is incorrect because the main account category is Cash, not Bank. Option D is incorrect because the account type is Asset, not Liability.

Answer

It defaults to credit posting.

Answer

It belongs to the Bank main account category.

Answer

It is a liability account.

Question 11

During a financial audit, it is discovered that some vendor invoices were posted with incorrect tax codes. The tax codes were set up correctly, but users manually overrode them. How can the company prevent manual tax code overrides in the future?

Accepted Answer

Set the 'Tax code override' option to 'No' in Accounts payable parameters.. Setting the 'Tax code override' option to 'No' in Accounts payable parameters prevents users from manually overriding tax codes on vendor invoices. Option A is incorrect because enabling an audit trail only records changes, it does not prevent overrides. Option B is incorrect because using tax settlement adjusts incorrect tax after posting, but does not prevent the override from occurring. Option D is incorrect because implementing a workflow approval could help control changes, but the specific setting to prevent manual tax code overrides is the parameter in Accounts payable parameters.

Answer

Enable audit trail for tax code changes.

Answer

Use tax settlement to adjust incorrect tax.

Answer

Implement a workflow approval for tax codes.

Question 12

Which TWO of the following are features of Dynamics 365 Finance for managing intercompany transactions?

Accepted Answer

Intercompany accounting. And Option D are correct. Intercompany accounting allows transactions between legal entities, and elimination rules remove intercompany activity for consolidation. Option B is wrong because consolidation is a separate feature for combining financials, not directly for managing intercompany transactions. Option C is wrong because fixed asset management deals with asset lifecycle, not intercompany transactions. Option E is wrong because budget control deals with budgeting, not intercompany transactions.

Answer

Consolidation

Answer

Fixed asset management

Answer

Budget control

Question 13

A company implements Dynamics 365 Finance and needs to ensure that vendor invoices are automatically matched to purchase orders and product receipts before payment. Which configuration should be used?

Accepted Answer

Enable invoice matching validation in Accounts payable parameters.. Accounts payable invoice matching policies enforce three-way matching (invoice, PO, receipt). Option A is wrong because payment schedules define installment plans, not invoice matching. Option B is wrong because vendor invoice workflow is for approval routing. Option D is wrong because budget control is for expenditure limits.

Answer

Define payment schedules for each vendor.

Answer

Configure vendor invoice workflow for approval.

Answer

Set up budget control to validate invoice amounts against available budget.

Question 14

A multinational company uses Dynamics 365 Finance with multiple legal entities. They need to consolidate financial data from all entities into a single reporting entity for quarterly reporting. The consolidation must eliminate intercompany transactions. Which feature should they use?

Accepted Answer

Consolidation [Elimination]. Consolidation [Elimination] in Dynamics 365 Finance is designed to consolidate financial data from multiple legal entities and eliminate intercompany transactions. Option B is wrong because Intercompany accounting records transactions but does not eliminate them. Option C is wrong because Ledger allocation rules allocate costs, not consolidate. Option D is wrong because Global budgeting is for budget control.

Answer

Intercompany accounting

Answer

Ledger allocation rules

Answer

Global budgeting

Question 15

A company uses Dynamics 365 Finance. They want to automatically generate vendor payments based on due dates and available cash discounts. Which payment proposal type should they use?

Accepted Answer

Due date proposal. The Due date proposal selects invoices due on or before a specified date, considering cash discounts. Option B is wrong because the Discount proposal selects invoices with available discounts but may ignore due dates. Option C is wrong because the Open transactions proposal is not a standard proposal type. Option D is wrong because the Specific invoices proposal is used for manually selected invoices only.

Answer

Discount proposal

Answer

Open transactions proposal

Answer

Specific invoices proposal

Question 16

A company wants to automate the generation of vendor payments based on due dates. Which Dynamics 365 Finance feature should they use?

Accepted Answer

Payment proposals. Correct: Payment proposals automate payment generation. Option A (Cash flow forecasting) is wrong because it is for capturing invoice data, not initiating payments. Option B (Purchase agreements) is wrong because they define contract pricing and terms, not payment processing. Option D (Vendor invoice capture) is wrong because it is used for predicting cash positions, not generating payments.

Answer

Cash flow forecasting

Answer

Purchase agreements

Answer

Vendor invoice capture

Question 17

A manufacturing company uses Dynamics 365 Finance to manage its financial operations. The finance team reports that when they post a purchase invoice, the system occasionally fails to update the general ledger correctly. What is the most likely cause of this issue?

Accepted Answer

Incorrect inventory posting profiles. Inventory posting profiles determine how inventory transactions are posted to the general ledger. If they are not correctly set up, posting may fail or update the wrong accounts. Option B is wrong because audit policies review transactions after posting and do not affect the general ledger update process itself. Option C is wrong because budget control settings prevent posting when budget is exceeded, but the issue described is intermittent and not specifically related to budget constraints. Option D is wrong because payment schedules affect payment timing, not the posting of purchase invoices to the general ledger.

Answer

Improperly configured audit policies

Answer

Budget control settings are too restrictive

Answer

Incorrect payment schedule setup

Question 18

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 19

A company is implementing Dynamics 365 Finance and needs to configure a chart of accounts that supports multiple legal entities with different fiscal requirements. Which structure should be used?

Accepted Answer

Use a shared chart of accounts with separate fiscal calendars per legal entity.. A shared chart of accounts is the recommended approach in Dynamics 365 Finance when multiple legal entities must operate under different fiscal requirements. By sharing the chart of accounts but assigning separate fiscal calendars per legal entity, the organization maintains a consistent account structure across entities while allowing each entity to comply with its own fiscal year, period definitions, and closing schedules. This balances standardization with regulatory flexibility.

Answer

Use a single shared chart of accounts with one shared fiscal calendar.

Answer

Use main accounts only without dimensions.

Answer

Create a separate chart of accounts for each legal entity.

Question 20

A company uses Dynamics 365 Finance and needs to create a vendor payment that includes a discount of $50 if paid within 10 days. The invoice is for $1,000. The payment is made on day 8. What should the payment amount be?

Accepted Answer

$950. The vendor payment is made within the 10-day discount period, so the $50 discount applies to the $1,000 invoice. The payment amount is $1,000 - $50 = $950. In Dynamics 365 Finance, this is handled through the cash discount setup on the vendor payment terms, which automatically calculates the discounted amount when the payment date falls within the discount window.

Answer

$1,000

Answer

$900

Answer

$1,050