- A
Intercompany transactions are only supported for sales orders.
Why wrong: Incorrect: They also support purchase orders, journals, etc.
- B
Intercompany transactions can be eliminated during consolidation using elimination rules.
Correct: Elimination rules remove intercompany balances during consolidation.
- C
Intercompany journals can be used to transfer balances between legal entities.
Correct: Intercompany journals record transactions between entities.
- D
Intercompany transactions must be entered manually in each legal entity.
Why wrong: Incorrect: Intercompany transactions can be automated using intercompany journals.
- E
Intercompany transactions cannot be eliminated during consolidation.
Why wrong: Incorrect: Elimination rules exist specifically for this purpose.
Quick Answer
The correct answer is that intercompany journals can be used to transfer balances between legal entities, and that intercompany transactions require elimination rules for consolidation. In Dynamics 365 Finance, intercompany accounting allows separate legal entities within a corporate group to transact with each other, but these internal profits and balances must be removed when producing consolidated financial statements. Elimination rules automate this process by zeroing out intercompany receivables, payables, revenue, and expenses so the group reports as a single economic entity. On the MB-920 exam, this topic tests your understanding of consolidation versus elimination—a common trap is assuming intercompany transactions are limited to sales orders or cannot be automated, when in fact they include purchases, journals, and can be fully automated. Remember the memory tip: “Eliminate the internal, keep the external”—intercompany entries are temporary and must cancel out for accurate group reporting.
MB-920 Describe Dynamics 365 Finance Practice Question
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.
Your company is implementing Dynamics 365 Finance and needs to manage intercompany transactions. Which TWO statements about intercompany accounting are correct?
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
Intercompany transactions can be eliminated during consolidation using elimination rules.
Option A is correct because intercompany transactions require elimination rules for consolidation. Option C is correct because intercompany journals can be used to record transactions between legal entities. Option B is wrong because intercompany transactions can be automated. Option D is wrong because intercompany transactions are not limited to sales orders; they include purchases and other transactions. Option E is wrong because intercompany transactions can be eliminated during consolidation.
Key principle: NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Intercompany transactions are only supported for sales orders.
Why it's wrong here
Incorrect: They also support purchase orders, journals, etc.
- ✓
Intercompany transactions can be eliminated during consolidation using elimination rules.
Why this is correct
Correct: Elimination rules remove intercompany balances during consolidation.
Related concept
Static NAT maps one inside address to one outside address.
- ✓
Intercompany journals can be used to transfer balances between legal entities.
Why this is correct
Correct: Intercompany journals record transactions between entities.
Related concept
Static NAT maps one inside address to one outside address.
- ✗
Intercompany transactions must be entered manually in each legal entity.
Why it's wrong here
Incorrect: Intercompany transactions can be automated using intercompany journals.
- ✗
Intercompany transactions cannot be eliminated during consolidation.
Why it's wrong here
Incorrect: Elimination rules exist specifically for this purpose.
Common exam traps
Common exam trap: NAT rules depend on direction and matching traffic
NAT is not only about the public address. The inside/outside interface roles and the ACL or rule that matches traffic are just as important.
Detailed technical explanation
How to think about this question
NAT questions usually test address translation, overload/PAT behaviour, static mappings and whether the right traffic is being translated. Read the interface direction and address terms carefully.
KKey Concepts to Remember
- Static NAT maps one inside address to one outside address.
- PAT allows many inside hosts to share one public address using ports.
- Inside local and inside global describe the private and translated addresses.
- NAT ACLs identify traffic for translation, not always security filtering.
TExam Day Tips
- Identify inside and outside interfaces first.
- Check whether the scenario needs static NAT, dynamic NAT or PAT.
- Do not confuse NAT matching ACLs with normal packet-filtering intent.
Key takeaway
NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Real-world example
How this comes up in practice
A cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
What to study next
Got this wrong? Here's your next step.
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related MB-920 NAT questions on configuration and troubleshooting.
- →
Describe Dynamics 365 Finance — study guide chapter
Learn the concepts, then practise the questions
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Describe Dynamics 365 Finance practice questions
Targeted practice on this topic area only
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FAQ
Questions learners often ask
What does this MB-920 question test?
Describe Dynamics 365 Finance — This question tests Describe Dynamics 365 Finance — Static NAT maps one inside address to one outside address..
What is the correct answer to this question?
The correct answer is: Intercompany transactions can be eliminated during consolidation using elimination rules. — Option A is correct because intercompany transactions require elimination rules for consolidation. Option C is correct because intercompany journals can be used to record transactions between legal entities. Option B is wrong because intercompany transactions can be automated. Option D is wrong because intercompany transactions are not limited to sales orders; they include purchases and other transactions. Option E is wrong because intercompany transactions can be eliminated during consolidation.
What should I do if I get this MB-920 question wrong?
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related MB-920 NAT questions on configuration and troubleshooting.
What is the key concept behind this question?
Static NAT maps one inside address to one outside address.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
Same concept, more angles
4 more ways this is tested on MB-920
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A company uses Dynamics 365 Finance to manage intercompany transactions. Which THREE steps are required to set up intercompany accounting?
hard- A.Create a consolidation company
- ✓ B.Define intercompany partners
- ✓ C.Set up elimination rules
- D.Set up budget models
- ✓ E.Configure intercompany accounting sequences
Why B: You must define intercompany partners, set up elimination rules, and configure intercompany accounting sequences. Creating a consolidation company is a separate process. Setting up budget models is unrelated.
Variation 2. A company uses Dynamics 365 Finance for intercompany transactions. Which THREE components are required to enable intercompany accounting?
hard- ✓ A.Intercompany agreements
- B.Intercompany journals for posting
- ✓ C.Intercompany relationships between legal entities
- ✓ D.Intercompany parameters in each legal entity
- E.Consolidation setup
Why A: Options A, C, and D are correct. Intercompany accounting requires defining intercompany relationships, setting up intercompany parameters, and creating intercompany agreements. Option B is wrong because intercompany journals are a result, not a prerequisite. Option E is wrong because consolidation is a separate process.
Variation 3. A multinational company uses Dynamics 365 Finance with multiple legal entities. They want to process intercompany transactions automatically. What should they configure?
medium- A.Elimination rules
- B.Consolidations
- C.Transfer orders
- ✓ D.Intercompany accounting
Why D: Intercompany accounting is the feature that automates intercompany transactions. Option A is correct. Option B is wrong because consolidation is for combining financials, not for day-to-day transactions. Option C is wrong because elimination is for removing intercompany balances. Option D is wrong because transfer orders are for inventory transfers.
Variation 4. A multinational company uses Dynamics 365 Finance with multiple legal entities. They want to streamline intercompany invoicing by automatically creating invoices for intercompany purchases when a purchase order is confirmed. What configuration is required?
hard- ✓ A.Configure intercompany parameters to automatically post invoices on purchase order confirmation.
- B.Use vendor invoices to manually record intercompany transactions.
- C.Create a purchase agreement between legal entities.
- D.Set up recurring invoices for each intercompany relationship.
Why A: Option B is correct because the intercompany setup in Dynamics 365 Finance includes a setting to automatically create intercompany invoices when purchase orders are confirmed. Option A is wrong because recurring invoices are for regular customer invoices, not intercompany. Option C is wrong because purchase agreements are for long-term contracts, not automatic intercompany invoicing. Option D is wrong because vendor invoices are for external purchases.
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Last reviewed: Jun 21, 2026
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