Quick Answer
The answer is the fixed-price milestone billing method. This is correct because it directly aligns with the need to bill a customer based on a predefined schedule of project deliverables, rather than tracking actual hours or costs. In Dynamics 365 Finance project accounting, the fixed-price milestone method allows you to set up specific billing rules tied to completed phases or events, generating invoices automatically when those milestones are reached. On the Microsoft Dynamics 365 Fundamentals ERP MB-920 exam, this question tests your ability to distinguish between the four core billing methods: time and material (actual hours), fixed-price milestone (predefined events), progress billing (percentage complete), and cost plus (cost plus fee). A common trap is confusing progress billing with milestone billing—remember that progress billing measures completion percentage, while milestones are discrete, contractually agreed-upon events. For a memory tip, think of a marathon: fixed-price milestone is like getting paid at each mile marker, not for how fast you run or how much water you drink.
This MB-920 practice question tests your understanding of describe dynamics 365 finance. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. 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.
An organization uses Dynamics 365 Finance for project accounting. They need to bill a customer for a fixed-price project based on a milestone schedule. Which billing method should be used?
Cost plus
Why wrong: Bills cost plus fee, not fixed price.
Progress billing
Why wrong: Bills based on percentage of completion, not specific milestones.
Fixed-price milestone
Allows billing based on predefined milestones for fixed-price projects.
Time and material
Why wrong: Bills based on actual hours and expenses, not milestones.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Fixed-price milestone
Time and material bills actual hours. Fixed-price milestone bills based on predefined milestones. Progress billing is for percentage complete. Cost plus bill is for cost plus contracts.
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.
Cost plus
Why it's wrong here
Bills cost plus fee, not fixed price.
Progress billing
Why it's wrong here
Bills based on percentage of completion, not specific milestones.
Fixed-price milestone
Why this is correct
Allows billing based on predefined milestones for fixed-price projects.
Related concept
Read the scenario before looking for a memorised answer.
Time and material
Why it's wrong here
Bills based on actual hours and expenses, not milestones.
Common exam traps
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
What to study next
Identify which MB-920 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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FAQ
Describe Dynamics 365 Finance — This question tests Describe Dynamics 365 Finance — Read the scenario before looking for a memorised answer..
The correct answer is: Fixed-price milestone — Time and material bills actual hours. Fixed-price milestone bills based on predefined milestones. Progress billing is for percentage complete. Cost plus bill is for cost plus contracts.
Identify which MB-920 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 21, 2026
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.
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