MB-310 Manage Budgeting Practice Question
A Dynamics 365 Finance user needs to transfer budget amounts from one department to another within the same fiscal year. The organization uses budget register entries for all budget adjustments. Which budget code should the user select to record this transfer?
⚠ Common exam trap
It's easy for candidates to confuse a budget transfer with a budget revision; a transfer keeps the total budget unchanged while moving amounts between dimensions, whereas a revision alters the total.
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
✓
Transfer
A budget transfer moves budget amounts from one department to another without changing the total budget. The Transfer budget code is specifically intended for this purpose. Original budget is for initial setup, Revision changes total budget, and Encumbrance reserves funds for commitments. Therefore, Transfer is the correct budget code for this scenario.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
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Encumbrance
Why it's wrong here
The Encumbrance budget code is used to reserve budget funds for anticipated expenditures, such as purchase orders. It does not transfer budget amounts between departments. Encumbrances reduce available budget temporarily and are reversed when the actual expense is recorded. This code is not appropriate for a permanent transfer of budget authority between departments.
- ✓
Transfer
Why this is correct
The Transfer budget code is specifically designed for moving budget amounts between dimensions, such as departments, within the same fiscal year. It records the reduction in one department and the increase in another as a single budget register entry. This ensures the transfer is properly tracked and does not affect the total budget. It is the correct choice for this scenario.
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Revision
Why it's wrong here
The Revision budget code is used to adjust the budget when the total budget amount changes, not for transfers between departments. A revision typically increases or decreases the overall budget without a corresponding offset. Using it for a transfer would not properly reflect the movement between departments and could misstate departmental budgets and total available funds.
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Original budget
Why it's wrong here
The Original budget budget code is used when initially creating the budget for a fiscal year. It represents the first approved budget and is not intended for subsequent transfers between departments. Using it for a transfer would incorrectly categorize the adjustment as part of the original budget, potentially causing reporting inaccuracies and confusion in budget vs. actual analysis.
About these practice questions
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Microsoft exam blueprint
This MB-310 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-310 exam.