MB-310 Practice Question: Implement and Manage Accounts Payable and Expenses
A legal firm uses Dynamics 365 Finance for accounts payable. When a new vendor is created, the firm must ensure that all future vendor invoices for that vendor are automatically eligible for 1099 reporting. Which configuration should you set on the vendor record?
⚠ Common exam trap
The trap here is assuming that a tax-related field like Tax exempt number or a vendor group setting controls 1099 reporting, when only the Report 1099 field on the vendor master does.
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
✓
On the Vendor master, in the Tax 1099 section, set the Report 1099 field to Yes and assign the appropriate 1099 box.
The Report 1099 field on the vendor record, along with the associated 1099 box, is the correct configuration to make a vendor reportable for 1099 purposes. When set to Yes, it ensures that all posted invoices for that vendor are automatically included in 1099 reporting without requiring per-invoice changes. This meets the requirement of automatic eligibility upon vendor creation.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
On the Vendor master, set the Vendor group to a group that has the '1099' purpose assigned.
Why it's wrong here
Vendor groups are used for default posting profiles, payment terms, and other defaults; they do not determine 1099 reportability. While a vendor group can have a default tax group or posting profile, it does not have a '1099 purpose' field that flags vendors for 1099 reporting. Relying on vendor group would not automatically make invoices 1099-reportable, so this option is incorrect.
- ✗
On the Vendor master, set the Tax exempt number for the vendor.
Why it's wrong here
The Tax exempt number field stores a government-issued identifier and has no effect on 1099 eligibility. It is used for tax reporting and exemption validation, not for flagging a vendor as reportable for 1099 purposes. Setting a tax exempt number here would not make the vendor's invoices appear in 1099 reports. This option is a distractor because it sounds tax-related, but it does not control 1099 reporting behavior.
- ✗
On the Vendor master, set the Default description to include '1099'.
Why it's wrong here
The Default description field is a free-text field used for search and identification purposes only. It has no functional impact on 1099 reporting or any other tax calculation. Adding '1099' to the description would not cause the vendor's invoices to be included in 1099 reports. This is a distractor that confuses a descriptive field with a configuration setting that controls reporting behavior.
- ✓
On the Vendor master, in the Tax 1099 section, set the Report 1099 field to Yes and assign the appropriate 1099 box.
Why this is correct
The Report 1099 field on the Vendor master, combined with the default 1099 box, is the mechanism that makes a vendor reportable for 1099 purposes. When this is set to Yes, the vendor's posted invoices are included in 1099 reporting and can be filtered by the specified box. This directly satisfies the requirement for automatic eligibility without manual intervention on each invoice.
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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
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