MB-920 Describe Dynamics 365 Finance Practice Question
A company uses Dynamics 365 Finance. The tax accountant needs to configure value-added tax (VAT) codes for multiple jurisdictions. Where should they set up the VAT rates?
⚠ Common exam trap
Many candidates confuse 'Sales tax codes' with a US-only concept, but in Dynamics 365 Finance, 'Sales tax' is the generic term for all consumption taxes including VAT, and the setup is always done via sales tax codes, not module parameters.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Sales tax codes
In Dynamics 365 Finance, value-added tax (VAT) rates are configured using sales tax codes, which are set up in the Tax module, not in General ledger, Accounts payable, or Inventory management parameters. The sales tax code defines the tax rate and calculation method for each jurisdiction, and it is the standard location for VAT rate setup across all modules.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
General ledger parameters
Why it's wrong here
General ledger parameters set up the chart of accounts, not tax rates.
- ✗
Accounts payable parameters
Why it's wrong here
Accounts payable parameters are for payment terms and vendor settings.
- ✗
Inventory management parameters
Why it's wrong here
Inventory parameters handle inventory settings, not tax.
- ✓
Sales tax codes
Why this is correct
Sales tax codes define the tax rates and calculation methods.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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