MB-310 Microsoft Dynamics 365 for Finance and Operations Interview Questions

Preparing for an interview is as important as preparing for an exam. Therefore, preparing for an interview takes a lot more practice and confidence to ace any exam. You have to make the best first impression. So to help our candidates to prepare well for the interview, we have tried our best to present you with the best and expert-revised interview questions. Candidates should research the company, job roles, and responsibilities, and most importantly look confident while answering any question. Moreover, we have covered all questions from basic to intermediate and to advance level. Therefore, we highly recommend the aspirants prepare with the best and achieve the best. But first, you should be familiar with the basics of what the MB-310 Microsoft Dynamics 365 for Finance and Operations exam is all about.

The MB-310 Microsoft Dynamics 365 for Finance and Operations exam is specially intended for Functional Consultants who analyze business requirements and translate those requirements into fully realized business processes and solutions that implement industry best practices. Candidates should have fundamental understanding of accounting principles and financial operations of businesses including accounts payables and accounts receivables, taxes, costing principles, fixed assets, and budgeting. Moreover, the MB-310 Microsoft exam tests your ability to accomplish:

• set up and configure financial management
• implement and manage accounts payable and expenses
• implement accounts receivable, credit, collections, and revenue recognition
• Lastly, manage budgeting and fixed assets.

Now, let’s begin with the MB-310 Microsoft Dynamics 365 for Finance and Operations Interview Questions.

Advanced Interview Questions

Can you explain the architecture of Dynamics 365 for Finance and Operations?

Dynamics 365 for Finance and Operations (D365FO) is a cloud-based enterprise resource planning (ERP) solution built on Microsoft’s Azure platform. It is designed to help organizations streamline their financial, operational, and supply chain processes.

The architecture of Dynamics 365 for Finance and Operations can be broadly divided into the following components:

1. Database: The underlying data storage layer of D365FO is a relational database built using Microsoft SQL Server. This database stores all of the transactional and master data that is used by the system.
2. Middle Tier: The middle tier is responsible for processing business logic and managing the flow of data between the database and the user interface. It is built using Microsoft’s Azure cloud services, and is designed to be highly scalable and reliable.
3. User Interface: The user interface of D365FO is designed to be easy to use and intuitive. It is built using the Microsoft Power Platform, which provides a low-code platform for building custom business applications.
4. Integration: D365FO has built-in integration capabilities that allow it to seamlessly integrate with other Microsoft technologies, such as Office 365, Power BI, and Power Apps. It also supports custom integrations with other systems through various APIs and integration tools.
5. Security: D365FO has a robust security model that includes role-based access control, data encryption, and multi-factor authentication. It also includes features for auditing and monitoring access to sensitive data.
6. Extensibility: D365FO has a highly extensible architecture that allows organizations to add custom business logic and extend the system to meet their specific needs. This can be achieved through the use of custom extensions, event-driven automation, and custom code development.

Overall, the architecture of Dynamics 365 for Finance and Operations is designed to provide organizations with a flexible, scalable, and secure platform for managing their financial, operational, and supply chain processes.

How do you set up a new company in Dynamics 365 for Finance and Operations?

Setting up a new company in Dynamics 365 for Finance and Operations involves several steps.

1. Create a new database: The first step is to create a new database in the Dynamics 365 for Finance and Operations system. This can be done by navigating to System administration > Workspaces > Databases. From here, you can click on the “New” button and provide the necessary information, such as the company name and database name.
2. Define company settings: After creating the database, you can define the company-specific settings, such as the company’s legal entity, currency, and tax information. To do this, navigate to Organization administration > Common > Companies, and then select the company you just created. Fill in the necessary details, and then click “Save.”
3. Set up chart of accounts: The next step is to set up the chart of accounts for the new company. You can do this by navigating to Financial management > General ledger > Chart of accounts, and then click on the “New” button to create a new chart of accounts. Make sure to add all the necessary accounts for your company’s financial reporting requirements.
4. Set up accounts payable and accounts receivable: After setting up the chart of accounts, you need to set up accounts payable and accounts receivable. This can be done by navigating to Financial management > Accounts payable > Vendors, and then clicking on the “New” button to create a new vendor account. Repeat the same process for accounts receivable by navigating to Financial management > Accounts receivable > Customers.
5. Set up bank accounts: To manage your company’s financial transactions, you need to set up bank accounts. This can be done by navigating to Financial management > Cash and bank management > Bank accounts, and then clicking on the “New” button to create a new bank account.
6. Define fiscal year: Finally, you need to define the fiscal year for the new company. This can be done by navigating to Financial management > General ledger > Fiscal years, and then clicking on the “New” button to create a new fiscal year.

In conclusion, setting up a new company in Dynamics 365 for Finance and Operations requires careful planning and attention to detail. By following these steps, you can ensure that your new company is properly set up and ready for business.

What is the role of a legal entity in Dynamics 365 for Finance and Operations?

A legal entity in Dynamics 365 for Finance and Operations (D365FO) is a legal structure, such as a corporation or limited liability company, that operates as a separate and distinct entity from its owners. In D365FO, the legal entity serves as the fundamental unit of financial and operational information and is used to define the boundaries for transactions, financial reporting, and compliance requirements.

The role of the legal entity in D365FO includes:

1. Financial and operational information management: The legal entity serves as a repository for all financial and operational information for a business, including accounts payable, accounts receivable, general ledger, and inventory management.
2. Compliance: The legal entity is responsible for ensuring that the company meets all legal and regulatory requirements, such as tax compliance, payroll laws, and labor laws.
3. Multi-currency support: The legal entity can be configured to support multiple currencies, which is especially important for multinational companies that do business in multiple countries.
4. Segmentation of financial information: The legal entity provides a way to segment financial information, allowing a company to separate its financial information by business unit, geographic region, or product line.
5. Accounting and financial reporting: The legal entity provides the foundation for accounting and financial reporting, including the preparation of financial statements, tax returns, and other regulatory reports.

In conclusion, the role of a legal entity in D365FO is to serve as the foundation for financial and operational information management, compliance, multi-currency support, segmentation of financial information, and accounting and financial reporting.

Can you walk us through the accounts payable process in Dynamics 365 for Finance and Operations?

here’s a general explanation of the accounts payable process in Dynamics 365 for Finance and Operations.

1. Create a Purchase Order: The first step in the accounts payable process is to create a purchase order for the goods or services being purchased. This purchase order will include details such as vendor information, item descriptions, quantities, and prices.
2. Receive Invoices: Once the goods or services have been received, the vendor will send an invoice to the company. This invoice should match the purchase order in terms of the items being billed, quantities, and prices.
3. Match Invoices to Purchase Orders: The next step is to match the received invoices to the purchase orders. This will help to ensure that the correct amounts are being charged and will help to catch any discrepancies between the purchase order and the invoice.
4. Approve Invoices: Once the invoices have been matched to the purchase orders, they need to be approved. This will typically be done by an accounts payable specialist who will verify that the invoices are accurate and complete.
5. Enter Invoices into Accounts Payable System: Once the invoices have been approved, they need to be entered into the accounts payable system. This will typically involve updating the vendor’s account balance and creating a record of the payment in the accounts payable ledger.
6. Schedule Payments: The next step is to schedule payments for the approved invoices. This will typically involve selecting the invoices to be paid and determining when the payments should be made.
7. Process Payments: Finally, the payments need to be processed. This will typically involve writing a check or making an electronic payment to the vendor.
8. Reconcile Accounts Payable: After the payments have been processed, it is important to reconcile the accounts payable ledger. This will ensure that all payments have been recorded correctly and that the vendor’s account balance is accurate.

The accounts payable process in Dynamics 365 for Finance and Operations is designed to be efficient and streamlined, making it easier for companies to manage their accounts payable and to ensure that all invoices are paid on time.

How do you handle intercompany transactions in Dynamics 365 for Finance and Operations?

I handle intercompany transactions by following the following steps:

1. Set up Intercompany Relationship: I set up an intercompany relationship between the two companies involved in the transaction. This involves creating a legal entity for each company, defining the intercompany relationship, and defining the intercompany chart of accounts.
2. Create Intercompany Sales Order: I create an intercompany sales order by selecting the customer account of the receiving company and entering the products or services being sold.
3. Transfer the Sales Order: I transfer the intercompany sales order to the receiving company by clicking on the “Intercompany Sales” button on the action pane.
4. Approve the Intercompany Sales Order: The receiving company approves the intercompany sales order by reviewing the details and clicking on the “Approve” button.
5. Post the Intercompany Sales Order: I post the intercompany sales order by clicking on the “Post” button. This creates the necessary ledger entries in both companies and updates the inventory levels.
6. Reconcile Intercompany Accounts: I reconcile the intercompany accounts on a regular basis to ensure that both companies’ records are in sync. This involves comparing the balances of the intercompany accounts in each company and making any necessary adjustments.

By following these steps, I am able to efficiently handle intercompany transactions in Dynamics 365 for Finance and Operations. This allows me to accurately track the flow of goods and services between companies, while also ensuring that my financial records are up-to-date.

Can you explain the difference between the standard cost and the actual cost in Dynamics 365 for Finance and Operations?

Standard cost is the estimated or predetermined cost of producing a unit of a product or performing a service. It is based on historical data, industry standards, and other relevant information. The standard cost takes into account the cost of raw materials, labor, overhead, and any other expenses associated with producing a product or delivering a service.

On the other hand, actual cost is the real cost of producing a unit of a product or delivering a service. It is based on actual data, including the actual cost of raw materials, labor, overhead, and any other expenses. The actual cost is determined after the product or service has been produced or delivered, and reflects the actual expenses incurred during the production or delivery process.

In Dynamics 365 for Finance and Operations, the standard cost is used as a benchmark to compare against the actual cost. This helps organizations to determine if they are operating efficiently, or if there are any areas where they can improve their processes and reduce costs. By comparing the standard cost to the actual cost, organizations can gain insight into their production processes and identify areas where they can optimize their operations and improve their bottom line.

In conclusion, standard cost and actual cost are two important metrics in Dynamics 365 for Finance and Operations. Standard cost provides an estimate of what it should cost to produce a product or deliver a service, while actual cost provides the actual cost incurred during the production or delivery process. The comparison between the two can provide valuable information to organizations, helping them to make data-driven decisions that improve their operations and profitability.

How do you create and manage a budget in Dynamics 365 for Finance and Operations?

To create and manage a budget in Dynamics 365 for Finance and Operations, you need to perform the following steps:

1. Set up budget models: Before creating a budget, you need to define budget models. Budget models define the structure and rules for budget creation, including budget periods, budget accounts, and budget scenarios.
2. Define budget scenarios: Budget scenarios allow you to create multiple versions of a budget and compare the results. Scenarios can be used to represent different budgeting assumptions, such as best-case and worst-case scenarios.
3. Create budget journals: Budget journals are used to record budget entries for budget periods and budget scenarios. You can create budget journals for specific accounts or for multiple accounts.
4. Enter budget data: Once the budget journal is created, you can enter budget data for the budget periods and scenarios. You can enter data for individual accounts or for multiple accounts.
5. Approve budgets: After entering budget data, the budget needs to be approved before it can be used for reporting and analysis.
6. Monitor and update budgets: Once the budget is approved, you can monitor the actual performance against the budget and make updates as necessary. You can create budget journals to record budget revisions and compare the actual performance with the revised budget.
7. Generate reports: Dynamics 365 for Finance and Operations provides a variety of reports to help you monitor budget performance, compare budget and actual results, and identify variances.

In summary, creating and managing a budget in Dynamics 365 for Finance and Operations involves defining budget models, creating budget scenarios, entering budget data, approving budgets, monitoring performance, and generating reports.

Can you discuss the various reporting options available in Dynamics 365 for Finance and Operations?

Dynamics 365 for Finance and Operations provides several reporting options for analyzing and presenting data in a variety of formats. These options include:

1. SQL Server Reporting Services (SSRS) Reports: These are traditional reports that are based on SQL Server data. They can be designed using the Report Designer tool and can be delivered in a variety of formats, including PDF, Excel, and HTML.
2. Power BI Reports: These are interactive reports that are designed using the Power BI Desktop tool and can be published to the Power BI service. They provide powerful data visualization and exploration capabilities.
3. Excel Reports: Dynamics 365 for Finance and Operations supports exporting data to Excel, where it can be further analyzed or used to create pivot tables, charts, and other types of reports.
4. Word Templates: Dynamics 365 for Finance and Operations supports generating documents based on Word templates, which can be used to create invoices, purchase orders, and other types of documents.
5. Cube Reports: Cube reports are based on OLAP (Online Analytical Processing) cubes and provide a way to analyze large amounts of data in a way that is optimized for performance. They can be designed using Excel Pivot Tables and Power BI.
6. Workspaces: Workspaces are a new type of reporting option that provides a simple, intuitive way to create reports, without the need for advanced technical skills. Workspaces provide a set of pre-built, customizable templates that can be used to create reports with a variety of data visualizations.

In summary, Dynamics 365 for Finance and Operations provides a range of reporting options that are designed to meet the needs of different types of users, from power users who require the ability to create complex reports, to business users who need simple, intuitive ways to access and analyze data.

How do you perform bank reconciliation in Dynamics 365 for Finance and Operations?

Bank reconciliation in Dynamics 365 for Finance and Operations is a process to compare the transactions recorded in the company’s general ledger with those reported by the bank. The goal is to identify and reconcile any discrepancies between the two sets of records. The following steps outline the process of performing bank reconciliation in Dynamics 365 for Finance and Operations:

1. Set up the bank account: To perform bank reconciliation, the first step is to set up the bank account in Dynamics 365 for Finance and Operations. The bank account should be linked to a general ledger account to facilitate the reconciliation process.
2. Import bank transactions: Next, import the bank transactions into Dynamics 365 for Finance and Operations. This can be done by using the Bank statement import functionality, which allows you to upload a file from the bank in the supported format.
3. Match transactions: Once the bank transactions have been imported, they can be matched to the transactions recorded in the general ledger. This is done by comparing the amounts, dates, and description of transactions in both systems. If a match is found, the transactions are marked as reconciled.
4. Resolve discrepancies: In case of discrepancies between the bank and general ledger transactions, the cause of the difference needs to be determined and resolved. This could be due to a transaction that was recorded incorrectly or omitted in one of the systems.
5. Update general ledger: Once the discrepancies have been resolved, the general ledger needs to be updated to reflect the changes. This will ensure that the balance in the general ledger matches the balance reported by the bank.
6. Finalize reconciliation: Finally, the reconciliation process can be finalized by reviewing the reconciliation report and making any necessary adjustments. This report shows the reconciled transactions, discrepancies, and the reconciled balance.

By performing bank reconciliation regularly, organizations can maintain accurate records, minimize errors, and identify potential issues before they become a problem.

Can you give an example of a custom report you have created in Dynamics 365 for Finance and Operations?

One example of a custom report I could create in Dynamics 365 for Finance and Operations is a sales analysis report. The report would include the following information:

1. Sales by Product: This section would provide a breakdown of total sales by product, including product name, sales quantity, and total sales amount.
2. Sales by Customer: This section would provide a breakdown of total sales by customer, including customer name, sales quantity, and total sales amount.
3. Sales by Salesperson: This section would provide a breakdown of total sales by salesperson, including salesperson name, sales quantity, and total sales amount.
4. Sales by Region: This section would provide a breakdown of total sales by region, including region name, sales quantity, and total sales amount.

To create this report, I would need to access the report designer in Dynamics 365 for Finance and Operations, select a suitable report template, and modify it to include the desired data fields and sections. I would then add filters to ensure that only relevant data is included in the report, such as a specific time period or a particular product line.

Once the report is created, it can be saved and shared with relevant stakeholders for analysis and decision-making purposes. The report could also be scheduled for automatic delivery on a regular basis, ensuring that stakeholders receive the latest sales data in a timely manner.

Basic Interview Questions

1. Define budget cycle?

Budget cycles refer to the duration of time that a budget is implemented, which can range from a portion of a fiscal year to multiple fiscal years, including biennial budget cycles spanning two years or triennial budget cycles spanning three years.

2. Define budget cycle time spans?

The budget cycle time span determines the number of periods that are covered by the budget cycle. This time span is specified on the Budget cycle time spans page.

3. What are Import currency exchange rates?

A critical system operation that facilitates batch processing is the process of retrieving exchange rates from exchange rate providers and importing them. It is responsible for ensuring that the exchange rates used in financial transactions are accurate and up-to-date.

4. What do you understand by Exchange rate provider registration?

Exchange rate providers need to be enabled before they can be used by default. This process is essential to ensure that exchange rates can be accessed when needed.

5. Why are Periodic journals called recurring journals?

Periodic journals are sometimes referred to as recurring journals since they contain repetitive information, including the amount and text, each time the periodic journal is retrieved. This repetition is useful in streamlining financial processes, ensuring consistency, and saving time.

6. What is ER?

ER is a tool that is use to configure formats for both incoming and outgoing electronic documents in accordance with the legal requirements of various countries/regions. Moreover, ER lets you manage these formats during their lifecycle.

7. List some features of ER?

• Employee Management: Allows the creation and management of employee records, positions, and performance evaluations.
• Benefits Management: Enables the tracking of employee benefits such as healthcare, retirement, and leave entitlements.
• Time and Attendance Tracking: Records employee time and attendance, and allows for the creation of pay scales and pay structures.
• Recruitment: Manages the recruitment process, including job postings, applicant tracking, and applicant evaluations.
• Training Management: Tracks employee training needs and progress, with the ability to schedule and manage training courses.
• Compliance Management: Helps ensure compliance with regulatory requirements and industry standards through document management and audit trails.
• Reporting: Provides extensive reporting capabilities to help track employee performance and company-wide metrics.
• Self-Service: Enables employees to manage their own profiles, time and attendance, and benefits information.

8. What are the two different components of ER?

ER supports two types of components:

• Data model
• Format.

9. What is a data model?

A data model component serves as an abstract representation of a data structure and plays a vital role in describing a specific business domain area in great detail. Its primary objective is to cater to the reporting requirements for that domain and provide a comprehensive understanding of the data structure.

10. List some capabilities of model mapping that supports outgoing electronic documents?

• Provides a structured way to map data elements between different systems and standards, ensuring accuracy and consistency in outgoing electronic documents.
• Enables businesses to customize and tailor their outgoing electronic documents according to their unique needs and preferences.
• Supports the integration of various systems and applications, streamlining the document transmission process and improving efficiency.

11. List some more capabilities of model mapping that support incoming electronic documents?

• It can use different updatable data elements as targets.
• It supports user input parameters that can be defined as data sources for a data model when some data must be specified at run time.

12. What are the applications of the format component?

• Formatting text: The format component can be used to modify the way text is displayed, such as changing font size, color, and style.
• Formatting numbers: The format component can be used to format numbers to make them easier to read, such as by adding commas or decimals.
• Formatting dates: The format component can be used to display dates in a specific format, such as “MM/DD/YYYY” or “DD/MM/YYYY”.

13. What is an Allocation base?

An allocation base is an essential tool that helps measure and quantify various activities, such as machine hours, kilowatt hours, or square footage that are consumed, used, or occupied. It serves as the foundation for allocating costs to one or more cost objects, enabling businesses to track their expenses effectively.

14. What is the use of Cost accounting?

Cost accounting allows businesses to collect data from multiple sources, including the general ledger, sub-ledgers, budgets, and statistical information. The collected data is then analyzed, summarized, and evaluated, providing management with crucial insights that enable them to make informed decisions regarding cost control, budgeting, and price updates.

15. What is Cost entry?

Cost entries are the result of a seamless transfer via data connectors from general ledger entries, cost allocations, and posted cost entries in cost journals, making it easier for businesses to monitor their expenses.

16. What is a Cost object?

Cost objects are any type of object selected for cost control, and costs or revenues are either directly posted or allocated to them. By assigning costs to specific objects, businesses can gain a better understanding of their expenses and make necessary adjustments to improve their overall financial performance.

17. List some Cost objects?

Some typical cost objects are:

• Firstly, Products
• Secondly, Projects
• Thirdly, Departments
• Lastly, Cost centers

18. What is Cost behavior?

Cost behavior is a crucial concept that helps classify costs based on how they respond to changes in key business activities. Understanding this behavior is critical for effective cost management.

19. What are the different types of cost behavior?

• fixed
• variable
• Lastly, semi-variable.

20. Define Fixed cost?

A fixed cost is a cost that doesn’t vary in the short term, regardless of changes in activity level. For example, a fixed cost can be a basic operating expense of a business, such as rent, that won’t be affected even if the activity level increases or decreases.

21. Define Variable cost?

Variable costs are those that change proportionately with changes in activity levels. These may include direct material costs that are tied to the production of a particular product.

22. Define Semi-variable cost?

Semi-variable costs are a mix of fixed and variable costs. They may include an internet access fee that combines a standard monthly access charge and a variable broadband usage fee.

23. Explain the Cost allocation policy?

To ensure accurate cost allocation, businesses establish a cost allocation policy that outlines the rules for determining the amounts and quantities to be allocated. This policy includes allocation source rules, which identify the costs to be allocated, and allocation target rules, which dictate where the costs should be allocated.

24. What is the use of Customer posting profiles?

Customer posting profiles enable you to assign general ledger accounts and document settings to all customers, a group of customers, or a single customer. These settings will be used when you create sales orders, free text invoices, cash payments, collection letters, and interest notes.

25. What is the overhead cost?

Overhead costs are ongoing expenses associated with running a business, such as rent and utility bills. These costs are not directly linked to specific business activities but are necessary for overall operations. Understanding the behavior of each cost type is vital for effective cost management and decision-making.

26. List a few examples of overhead costs?

• Firstly, Accounting fees
• Depreciations
• Insurance
• Interest
• Legal fees
• Taxes
• Lastly, Utility costs

27. List the elements of workflow?

• Firstly, Allocation to the Sales departments and aggregation of their submissions
• Secondly, the Budget manager review
• Thirdly, CFO approval
• Lastly, Staging transitions between each stage of the budget planning workflow

28. What is the use of Budget planning processes?

The process of budget planning involves determining the different stages through which a budget plan will be updated, reviewed, and ultimately approved within an organization’s hierarchy. This process is closely linked to both the budget cycle and the legal entity that is responsible for overseeing the budgeting process.

29. What are Budget planning stages?

Budget planning stages play a critical role in defining the various steps that a budget plan must undergo from its initial creation to its final approval. These stages are an essential aspect of the overall budget planning process and are typically arranged in a specific order to ensure that each step is completed thoroughly and accurately.

30. Define Parameters?

Parameters define the security rules that are applied to budget plans and the default financial dimensions that should be used when users drill into the amounts in budget plan scenarios.

31. What is Budget planning workflows?

The budget planning stages are typically organized into a series of workflows that define the various automated and manual processes that are required to move the budget plan through each stage. These workflows are an essential aspect of the budgeting process and ensure that each stage is completed efficiently and effectively, helping organizations to make informed decisions about their financial resources.