Microsoft Certified: Dynamics 365 Finance Functional Consultant Associate — Practice Set 1

Question 1

You are a Dynamics 365 Finance functional consultant. Your organization needs to configure the chart of accounts for a new legal entity. Which component defines the structure and format of main account numbers?

Accepted Answer

An account structure defines the main account and financial dimension segments, their order, and allowed values. It is assigned to the ledger and controls how account numbers are formed in Microsoft Dynamics 365 Finance.

Question 2

Your organization uses Microsoft Dynamics 365 Finance. You need to ensure that journal entries for a specific account always require approval before posting. Which feature should you configure?

Accepted Answer

Journal workflows in Microsoft Dynamics 365 Finance can be configured on a journal name to require approval before posting. This ensures that entries go through a defined approval process.

Question 3

You are a Dynamics 365 Finance functional consultant. Contoso Ltd. operates in multiple countries and must comply with local statutory reporting. The company needs to produce financial statements that consolidate subsidiaries in different currencies. Which feature in Microsoft Dynamics 365 Finance should you use?

Accepted Answer

The Consolidations feature in Microsoft Dynamics 365 Finance supports combining financial data from multiple legal entities and translating subsidiary currencies to the consolidation currency using defined exchange rate types.

Question 4

Your organization uses Microsoft Dynamics 365 Finance. You need to configure intercompany accounting so that a journal entry in one legal entity automatically creates an offsetting entry in another legal entity. Which setup is required?

Accepted Answer

Intercompany accounting in Microsoft Dynamics 365 Finance requires configuring pairs of originating and destination accounts between legal entities. When a journal is posted in the originating entity, the system automatically creates the offsetting entry in the destination entity.

Question 5

Your organization uses Microsoft Dynamics 365 Finance. You need to configure currency revaluation for foreign currency accounts at month end. Which two settings must be configured for the revaluation to run correctly? Choose 2.

Accepted Answer

Foreign currency revaluation in Microsoft Dynamics 365 Finance requires an exchange rate type defined on the ledger (to determine which rates to use) and each main account must be flagged for foreign currency revaluation in the main account settings.

Question 6

You are a Dynamics 365 Finance functional consultant. Your organization needs to configure customer payment terms so that customers who pay within 10 days receive a 2% discount. Which setup supports this requirement?

Accepted Answer

Cash discounts in Microsoft Dynamics 365 Finance are configured under Accounts receivable > Setup > Cash discounts and then linked to terms of payment. This allows early payment discounts such as 2/10 Net 30.

Question 7

Your organization uses Microsoft Dynamics 365 Finance. A collections agent needs to view all overdue invoices for a customer and send a collections letter. Which workspace should the agent use?

Accepted Answer

The Collections coordinator workspace in Microsoft Dynamics 365 Finance provides a centralized view for collections agents to review aged balances, activity history, and send collections letters or make promises to pay.

Question 8

You are a Dynamics 365 Finance functional consultant. Fabrikam Inc. provides subscription-based services and needs to recognize revenue over the service period rather than at invoice date. Which Microsoft Dynamics 365 Finance feature should you implement?

Accepted Answer

Subscription billing in Microsoft Dynamics 365 Finance supports recurring billing and revenue recognition schedules, allowing revenue to be deferred and recognized over the contract period in compliance with ASC 606 / IFRS 15.

Question 9

Your organization uses Microsoft Dynamics 365 Finance. You need to configure credit management so that sales orders exceeding a customer's credit limit are automatically placed on hold. Which two items must be configured? Choose 2.

Accepted Answer

Credit management in Microsoft Dynamics 365 Finance requires a credit limit set on the customer account and a blocking rule configured to evaluate when orders should be placed on hold. Without both, automatic holds will not trigger.

Question 10

You are a Dynamics 365 Finance functional consultant. Your organization needs to apply a customer payment to multiple invoices automatically based on the oldest invoice first. Which feature enables this?

Accepted Answer

Microsoft Dynamics 365 Finance supports automatic settlement with priority rules. By setting the priority to oldest first, incoming payments are applied to the oldest open invoices automatically during the settlement process.

Question 11

You are a Dynamics 365 Finance functional consultant. Your organization needs to configure three-way matching for purchase orders to verify that invoice quantities and prices match both the purchase order and the product receipt. Which feature should you enable?

Accepted Answer

Three-way matching in Microsoft Dynamics 365 Finance is enabled through the invoice matching policy in Accounts payable parameters. It compares the vendor invoice with the purchase order and the product receipt to verify quantities and prices.

Question 12

You are a Dynamics 365 Finance functional consultant. Adventure Works needs employees to submit expense reports with itemized receipts that are approved by their managers before reimbursement. Which Microsoft Dynamics 365 Finance module should you configure?

Accepted Answer

The Expense management module in Microsoft Dynamics 365 Finance allows employees to submit expense reports with itemized receipts, attach receipt images, and route reports through a configurable workflow approval process before reimbursement.

Question 13

Your organization uses Microsoft Dynamics 365 Finance. You need to configure vendor payment proposals to automatically select invoices due within the next 10 days. Which feature should you use?

Accepted Answer

Vendor payment proposals in Microsoft Dynamics 365 Finance allow you to filter open invoices by due date, discount date, or other criteria. Setting a due date filter to the next 10 days will select all qualifying invoices for payment.

Question 14

Your organization uses Microsoft Dynamics 365 Finance. You need to configure the expense management module to support per diem allowances for employees traveling internationally. Which two items must you configure? Choose 2.

Accepted Answer

Per diem in Microsoft Dynamics 365 Finance expense management requires configuring per diem locations with the applicable daily rates, and expense categories must be configured as per diem eligible so employees can select them when creating expense reports.

Question 15

Your organization uses Microsoft Dynamics 365 Finance. You need to configure a prepayment invoice so that an advance payment to a vendor is tracked separately from regular invoices and can be applied when the final invoice arrives. Which feature should you use?

Accepted Answer

Vendor prepayments in Microsoft Dynamics 365 Finance use a separate prepayment posting profile to record advance payments to a dedicated balance sheet account. When the final invoice arrives, the prepayment can be applied and settled against the invoice.

Question 16

You are a Dynamics 365 Finance functional consultant. Your organization needs to create and approve budget plans before transferring them to the budget register. Which feature supports this process?

Accepted Answer

Budget planning in Microsoft Dynamics 365 Finance allows organizations to create, collaborate on, and approve budget plans through a configurable workflow before the approved amounts are transferred to the budget register entries.

Question 17

Your organization uses Microsoft Dynamics 365 Finance. You need to prevent purchase orders from being confirmed if the purchase would exceed the approved budget for the department. Which feature should you configure?

Accepted Answer

Budget control in Microsoft Dynamics 365 Finance checks available budget funds when source documents (such as purchase orders) are created or confirmed. If funds are insufficient, the system can warn or block the transaction depending on configuration.

Question 18

You are a Dynamics 365 Finance functional consultant. Northwind Traders needs to distribute an approved corporate budget to department managers who refine it before final approval. The process must support multiple revision cycles and consolidate submissions. Which Microsoft Dynamics 365 Finance feature supports this multi-stage budget process?

Accepted Answer

Budget planning stages in Microsoft Dynamics 365 Finance define the sequence of the planning process. Allocation methods (distribute, aggregate, spread) allow top-down distribution to departments and bottom-up aggregation. Workflow routes plans through approval at each stage.

Question 19

Your organization uses Microsoft Dynamics 365 Finance. You need to transfer additional funds to a department's budget mid-year without creating a new budget plan. Which action should you take?

Accepted Answer

Budget register entries in Microsoft Dynamics 365 Finance support multiple budget types including Original, Revision, Transfer, and Carry-forward. A Transfer budget entry allows moving funds between accounts or departments without revising the original budget plan.

Question 20

You are a Dynamics 365 Finance functional consultant. Your organization has acquired new equipment and needs to record it as a fixed asset. Which posting type is used when the asset is placed in service and depreciation begins?

Accepted Answer

The Acquisition posting type in Microsoft Dynamics 365 Finance records the initial capitalization of a fixed asset. Once acquired, depreciation proposals can be run to systematically reduce the asset's net book value over its useful life.

Question 21

Your organization uses Microsoft Dynamics 365 Finance. You need to configure a fixed asset that will be depreciated using the straight-line service life method. Which setup determines how depreciation is calculated?

Accepted Answer

Depreciation profiles in Microsoft Dynamics 365 Finance define the depreciation method (straight-line, reducing balance, etc.) and the calculation parameters. The profile is assigned to a depreciation book (value model) which is attached to the fixed asset.

Question 22

You are a Dynamics 365 Finance functional consultant. Tailspin Toys leases office equipment under a lease agreement classified as a finance lease under IFRS 16. The company needs to record the right-of-use asset and lease liability. Which Microsoft Dynamics 365 Finance module should you use?

Accepted Answer

The Asset leasing module in Microsoft Dynamics 365 Finance supports IFRS 16 and ASC 842 compliance. Finance leases are configured to recognize right-of-use assets and lease liabilities, with automated schedules for amortization and interest expense.

Question 23

Your organization uses Microsoft Dynamics 365 Finance. You need to dispose of a fully depreciated fixed asset by selling it to an external party. Which two steps are required to record the disposal correctly? Choose 2.

Accepted Answer

Disposing a fixed asset via sale in Microsoft Dynamics 365 Finance requires: (1) a disposal posting profile configured in the fixed asset group to specify the gain/loss accounts, and (2) posting a disposal – sale journal that records the sale proceeds and removes the asset from the books.

Question 24

Your organization uses Microsoft Dynamics 365 Finance. You need to split one fixed asset into two separate assets because part of the equipment was sold independently. Which feature should you use?

Accepted Answer

The Fixed asset split feature in Microsoft Dynamics 365 Finance allows you to divide a portion of an asset's acquisition cost and accumulated depreciation into a new asset record, which is required when part of an asset is disposed of or sold separately.

Question 25

Your organization uses Microsoft Dynamics 365 Finance. You need to configure year-end close so that profit and loss account balances are transferred to a retained earnings account and balance sheet accounts are carried forward. What should you do?

Accepted Answer

The year-end close process in Microsoft Dynamics 365 Finance automatically zeros out profit and loss accounts and transfers the net result to the retained earnings account specified in the year-end close parameters. Balance sheet accounts are carried forward to the new fiscal year.

MB-310 — Microsoft Dynamics 365 Finance Functional Consultant