MB-920 Describe Dynamics 365 Finance Practice Question
A retail company using Dynamics 365 Finance notices that inventory valuations are incorrect due to varying purchase prices. Which costing method will provide the most accurate valuation by averaging costs over a period?
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
✓
Weighted average
Weighted average costing calculates an average cost over a period, smoothing out price fluctuations. Option B is wrong because standard cost uses predetermined costs, not actual costs. Option C is wrong because FIFO assigns the oldest cost to sales. Option D is wrong because moving average recalculates after each transaction, not over a period.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Weighted average
Why this is correct
Weighted average calculates an average cost over a period, smoothing out price fluctuations.
- ✗
Standard cost
Why it's wrong here
Standard cost uses predetermined costs, not actual costs, so it may not reflect varying purchase prices.
- ✗
FIFO
Why it's wrong here
FIFO assigns the oldest costs to sales, which does not average out fluctuations over a period.
- ✗
Moving average
Why it's wrong here
Moving average recalculates after each transaction, not over a period, so it does not average costs over a period.
Go deeper
Related to this question
About these practice questions
One of 930 original MB-920 practice questions on Courseiva, each with a full explanation and wrong-answer analysis — not exam dumps or protected exam content. Learn why practice questions differ from exam dumps →
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This MB-920 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MB-920 exam.