Describe Dynamics 365 Supply Chain Management →easyMultiple ChoiceObjective-mapped

MB-920 Describe Dynamics 365 Supply Chain Management Practice Question

A retail company wants to track the cost of goods sold using a method that assumes the most recently purchased items are sold first. Which costing method should they configure?

⚠ Common exam trap

Test-takers frequently confuse LIFO with FIFO, assuming 'most recently purchased' means the newest items are sold last, but the question explicitly states 'sold first,' which directly points to LIFO.

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

✓

LIFO

D is correct because LIFO (Last In, First Out) assumes the most recently purchased items are sold first, which matches the company's requirement to track cost of goods sold using that assumption. In Dynamics 365 Supply Chain Management, LIFO is an inventory costing method that can be configured in the item model group to calculate the cost of goods sold based on the cost of the latest received inventory.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

✗
Standard cost
Why it's wrong here
Standard cost uses predetermined costs, not actual purchase order costs.
✗
FIFO
Why it's wrong here
FIFO (First In, First Out) assumes oldest items are sold first.
✗
Weighted average
Why it's wrong here
Weighted average calculates an average cost of all inventory.
✓
LIFO
Why this is correct
LIFO (Last In, First Out) assumes most recently purchased items are sold first.

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MB-920 Describe Dynamics 365 Supply Chain Management Practice Question

Why each option matters

Option-by-option breakdown

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