This MB-920 practice question tests your understanding of describe the core capabilities of the finance and operations apps. This is a configuration task: choose the command set that satisfies every stated requirement. Small differences — like 'secret' vs 'password' or 'transport input ssh' vs 'all' — change whether the answer is correct. 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 retail chain uses Dynamics 365 Finance and Operations. They are planning to expand to a new country and need to comply with local tax regulations, including VAT reporting and electronic invoicing. They want to leverage built-in capabilities rather than custom development. What should they configure?
Accounts payable
Why wrong: Accounts payable processes invoices but does not configure tax compliance.
Tax engine and Electronic reporting
These tools allow configuration of tax rules and electronic document formats per country.
General ledger
Why wrong: General ledger is for posting accounts, not tax-specific compliance.
Cash and bank management
Why wrong: This module manages bank transactions, not tax reporting.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Tax engine and Electronic reporting
The Tax engine and Electronic reporting (ER) are the built-in capabilities in Dynamics 365 Finance and Operations designed to handle complex tax regulations like VAT reporting and electronic invoicing. The Tax engine allows configuration of tax codes, rates, and rules for different jurisdictions, while Electronic reporting enables the generation of legally required electronic invoice formats (e.g., XML, EDI) without custom code. This directly addresses the need to comply with local tax regulations in a new country using out-of-the-box features.
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.
Accounts payable
Why it's wrong here
Accounts payable processes invoices but does not configure tax compliance.
Tax engine and Electronic reporting
Why this is correct
These tools allow configuration of tax rules and electronic document formats per country.
Related concept
Read the scenario before looking for a memorised answer.
General ledger
Why it's wrong here
General ledger is for posting accounts, not tax-specific compliance.
Cash and bank management
Why it's wrong here
This module manages bank transactions, not tax reporting.
Common exam traps
The trap here is that candidates often confuse the General ledger or Accounts payable as the primary tools for tax compliance, overlooking that the Tax engine and Electronic reporting are the dedicated, configurable modules for handling country-specific tax regulations and electronic invoicing without custom development.
Detailed technical explanation
The Tax engine in Dynamics 365 Finance and Operations uses a configurable tax matrix that supports multiple tax types (e.g., VAT, GST, sales tax) with parameters like tax rates, exemptions, and non-deductible percentages. Electronic reporting (ER) leverages a format designer to map data models to specific electronic invoice schemas (e.g., PEPPOL, CFDI), enabling automated submission to tax authorities. In a real-world scenario, expanding to a country like Italy would require configuring the Tax engine for Italian VAT (IVA) and using ER to generate the mandatory Fattura Elettronica XML format.
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 the core capabilities of the finance and operations apps — This question tests Describe the core capabilities of the finance and operations apps — Read the scenario before looking for a memorised answer..
The correct answer is: Tax engine and Electronic reporting — The Tax engine and Electronic reporting (ER) are the built-in capabilities in Dynamics 365 Finance and Operations designed to handle complex tax regulations like VAT reporting and electronic invoicing. The Tax engine allows configuration of tax codes, rates, and rules for different jurisdictions, while Electronic reporting enables the generation of legally required electronic invoice formats (e.g., XML, EDI) without custom code. This directly addresses the need to comply with local tax regulations in a new country using out-of-the-box features.
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 24, 2026
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