Quick Answer
The answer is to set 'Require approval for vendor' to Yes in Procurement and sourcing parameters. This configuration enforces a prerequisite check at the time of purchase order creation, ensuring that a purchase order cannot be created without an approved vendor. In Microsoft Dynamics 365, the vendor record must be in an "Approved" status for the system to allow the transaction to proceed; otherwise, the system blocks the order entry. On the MB-920 exam, this topic tests your understanding of procurement controls and vendor lifecycle management, often appearing as a scenario where a company needs to require approved vendor for purchase orders to avoid unauthorized spending. A common trap is confusing this with vendor hold or vendor approval workflows, which manage different stages of vendor interaction. Remember the memory tip: "Approved vendor, approved order" — if the vendor isn't approved, the purchase order can't be born.
This MB-920 practice question tests your understanding of describe dynamics 365 finance. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A company needs to ensure that purchase orders cannot be created without an approved vendor. Which configuration should be used?
Create a purchase order approval workflow
Why wrong: Approves purchase orders, not vendor status.
Set 'Require approval for vendor' to Yes in Procurement and sourcing parameters
Prevents use of unapproved vendors in purchase orders.
Enable 'Invoice matching validation'
Why wrong: Affects invoice processing, not purchase orders.
Set vendor status to Active
Why wrong: Does not enforce approval requirement.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
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.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Create a purchase order approval workflow
Why it's wrong here
Approves purchase orders, not vendor status.
Set 'Require approval for vendor' to Yes in Procurement and sourcing parameters
Why this is correct
Prevents use of unapproved vendors in purchase orders.
Related concept
Read the scenario before looking for a memorised answer.
Enable 'Invoice matching validation'
Why it's wrong here
Affects invoice processing, not purchase orders.
Set vendor status to Active
Why it's wrong here
Does not enforce approval requirement.
Common exam traps
The trap here is that candidates may confuse a purchase order approval workflow (which approves the order itself) with the vendor approval prerequisite, or assume that simply setting a vendor to Active is sufficient to enforce the restriction.
Detailed technical explanation
The 'Require approval for vendor' parameter is part of the Procurement and sourcing parameters and works in conjunction with the vendor approval workflow. When enabled, the system checks the vendor's approval status (Approved, Pending, Rejected) before allowing purchase order creation; if the vendor is not in an Approved state, the system blocks the transaction. This is often used in regulated industries where procurement must only occur from pre-vetted suppliers, ensuring compliance with internal controls and audit requirements.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
What to study next
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FAQ
Describe Dynamics 365 Finance — This question tests Describe Dynamics 365 Finance — Read the scenario before looking for a memorised answer..
The correct answer is: 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.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 11, 2026
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