MB-920 Describe Dynamics 365 Finance Practice Question
You are a Dynamics 365 Finance functional consultant for a company that operates in a country where tax regulations require the use of tax codes with different rates for various goods and services. The company needs to ensure that sales invoices automatically calculate tax based on the item's tax group and the customer's tax exemption status. They also need to generate tax reports for authorities. Requirements: 1) Configure tax codes and groups for automated tax calculation. 2) Handle tax exemptions. 3) Use standard Dynamics 365 Finance features. Which configuration should you set up?
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
✓
Create sales tax codes, sales tax groups, and item sales tax groups. Assign tax exemption certificates to customers as needed.
Setting up sales tax codes, sales tax groups, and item sales tax groups, and assigning tax exemption certificates to customers, allows automatic tax calculation and reporting. Option A is correct.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Create sales tax codes, sales tax groups, and item sales tax groups. Assign tax exemption certificates to customers as needed.
Why this is correct
This configuration enables automated tax calculation and exemption handling.
- ✗
Use the 'Tax calculation' service in Dynamics 365 Finance.
Why it's wrong here
Tax calculation service is for advanced scenarios but not required.
- ✗
Configure the 'General ledger parameters' to apply a default tax rate to all transactions.
Why it's wrong here
Default tax rate does not handle varying rates and exemptions.
- ✗
Set up a custom workflow for tax approval on each invoice.
Why it's wrong here
Workflow does not automate tax calculation.
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