MB-920 Describe Dynamics 365 Finance Practice Question
A retail company using Dynamics 365 Finance notices that sales tax is not being calculated correctly on invoices for cross-border transactions. The tax setup includes multiple tax codes and tax groups. What is the most likely cause?
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
✓
Tax codes are not correctly assigned to the items or customers involved.
If tax codes are not assigned to items or customers, the system cannot determine the appropriate tax rate, leading to incorrect calculations. Option B is wrong because the tax authority configuration is about reporting and remittance, not calculation. Option C is wrong because ledger posting groups only affect where tax amounts are posted, not how they are calculated. Option D is wrong because withholding tax is a separate deduction and does not impact sales tax calculation.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Tax codes are not correctly assigned to the items or customers involved.
Why this is correct
Tax codes determine the rate and rules; incorrect assignment leads to wrong calculation.
- ✗
The tax authority is not configured for cross-border transactions.
Why it's wrong here
Tax authority is for reporting, not calculation.
- ✗
The ledger posting group for sales tax is set incorrectly.
Why it's wrong here
Ledger posting groups affect posting accounts, not calculation.
- ✗
Withholding tax is enabled for the vendor.
Why it's wrong here
Withholding tax is separate from sales tax.
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