Quick Answer
The answer is the budget model, budget cycle, and budget register entry. These three components are required because the budget model provides the structural framework for organizing data by financial dimensions like department and cost center, the budget cycle defines the time period and control rules for the budget, and the budget register entry is the transaction document that records actual budget amounts for comparison. On the Microsoft Dynamics 365 Fundamentals ERP MB-920 exam, this question tests your understanding of the foundational setup needed for budget vs actual analysis, often appearing as a multi-select scenario where a common trap is to include financial dimensions alone—which are configured separately but not one of the three core components. Remember the mnemonic “MCR” for Model, Cycle, Register to lock in the trio.
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 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?
Budget control configuration
Why wrong: For controlling spending, not analysis.
Budget model
Required to define budget amounts.
Financial dimensions
Enable analysis by department and cost center.
Budget cycle
Defines the time period for budgeting.
Budget register entries
Why wrong: Used to enter budget amounts, not analysis.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Budget model
The budget model is a required component because it defines the structure for how budget data is organized and calculated, such as by department or cost center. Without a budget model, the system cannot aggregate or compare actuals against budgeted amounts across different financial dimensions. It serves as the foundational framework for budget planning and analysis.
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.
Budget control configuration
Why it's wrong here
For controlling spending, not analysis.
Budget model
Why this is correct
Required to define budget amounts.
Related concept
Read the scenario before looking for a memorised answer.
Financial dimensions
Why this is correct
Enable analysis by department and cost center.
Related concept
Read the scenario before looking for a memorised answer.
Budget cycle
Why this is correct
Defines the time period for budgeting.
Related concept
Read the scenario before looking for a memorised answer.
Budget register entries
Why it's wrong here
Used to enter budget amounts, not analysis.
Common exam traps
The trap here is that candidates often confuse budget control configuration (a spending enforcement tool) with the foundational setup needed for budget analysis, leading them to select it instead of recognizing that budget model, cycle, and dimensions are the three core components.
Detailed technical explanation
In Dynamics 365 Finance, the budget model works with budget cycles and financial dimensions to enable multi-dimensional analysis. For example, a budget model can be configured to use department and cost center dimensions, allowing the CFO to drill down into variances at a granular level. The system stores budget amounts in the BudgetSource table, which links to the budget model and dimensions for real-time reporting via Power BI or financial reports.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
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: Budget model — The budget model is a required component because it defines the structure for how budget data is organized and calculated, such as by department or cost center. Without a budget model, the system cannot aggregate or compare actuals against budgeted amounts across different financial dimensions. It serves as the foundational framework for budget planning and analysis.
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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