MB-310 Study Notes

Microsoft Dynamics 365 Finance Functional Consultant (MB-310)

Exam Overview

• Exam Code: MB-310
• Duration: 100 minutes
• Questions: 40-60 questions
• Passing Score: 700/1000
• Cost: $165 USD

Domain 1: Implement Financial Management (40-45%)

Configure the General Ledger

The general ledger is the foundation of financial management in Dynamics 365 Finance. Key configuration elements include:

• Chart of Accounts: Main accounts represent the primary account classification (assets, liabilities, equity, revenue, expenses).
• Financial Dimensions: Additional categorizations like Department, Cost Center, Project that enable detailed tracking and reporting.
• Account Structures: Combine main accounts with required dimensions to create full account numbers.
• Advanced Rules: Control which dimension combinations are valid (e.g., Project A only with Department X).

Posting Profiles and Posting Definitions

Posting profiles map subledger transactions to GL accounts:

• Customer Posting Profile: Defines summary receivable account, revenue accounts, discount accounts.
• Vendor Posting Profile: Defines summary payable account, purchase expense defaults, discount accounts.
• Posting Definitions: Automatically generate additional ledger entries based on transaction patterns.

Multi-Currency and Exchange Rates

• Accounting Currency: Primary currency for legal entity financial statements.
• Reporting Currency: Additional currency for group reporting (optional).
• Transaction Currency: Currency of the actual transaction (may differ from accounting currency).
• Exchange Rate Revaluation: Process to revalue foreign currency balances at period-end (realized vs. unrealized gains/losses).

Bank Management

• Bank Accounts: Configure company bank accounts with account numbers, routing, IBAN.
• Bank Reconciliation: Match bank statements to system transactions, identify discrepancies.
• Positive Pay: Send check register to bank to prevent fraud.
• Electronic Payments: Generate payment files in various formats (ACH, wire, ISO 20022).

Domain 2: Implement Accounts Receivable (15-20%)

Customer Configuration

• Customer Groups: Categorize customers for shared settings and reporting.
• Payment Terms: Define due dates and discount structures (e.g., 2/10 Net 30).
• Credit Limits: Set maximum receivable balance per customer with checking rules.
• Posting Profiles: Control GL accounts used for customer transactions.

Credit Management

• Credit Holds: Block orders when customer exceeds credit limit or has overdue balances.
• Risk Assessment: Calculate credit scores based on payment history and exposure.
• Hold Release: Workflow for credit manager approval to release held orders.

Collections

• Collection Letters: Automated reminder sequence based on aging thresholds.
• Collection Cases: Track collection activities and promised payments.
• Write-offs: Process for bad debt recognition with approval thresholds.
• Customer Pools: Group customers for targeted collection strategies.

Revenue Recognition

• Deferral Schedules: Defer revenue over service delivery period (ASC 606 compliance).
• Recognition Process: Monthly process to recognize deferred revenue per schedule.
• Free Text Invoices: Support deferral schedules on invoice lines.

Domain 3: Implement Accounts Payable (10-15%)

Vendor Configuration

• Vendor Groups: Categorize vendors with shared settings.
• Payment Terms: Define payment due dates and early payment discounts.
• Payment Methods: Check, ACH, wire transfer with format configurations.
• Posting Profiles: Control GL accounts for vendor transactions.

Purchase Orders and Invoice Matching

• Two-Way Matching: Validate invoice against purchase order (no receipt required).
• Three-Way Matching: Validate invoice against PO and product receipt (goods received).
• Matching Tolerances: Define acceptable variances for price, quantity, and charges.
• Matching Policies: Configure by vendor, item, or procurement category.

Vendor Payments

• Payment Proposals: Generate payment lists based on due dates and available cash.
• Payment Journals: Record payments reducing AP and cash balances.
• Payment Files: Generate electronic payment files for bank transmission.
• Prepayments: Process advance payments to vendors with application to invoices.

Expense Management

• Expense Categories: Define allowed expense types (travel, meals, supplies).
• Expense Policies: Set limits and approval requirements per category.
• Credit Card Integration: Import corporate card transactions and match to expenses.
• Approval Workflow: Route expense reports based on amount and type.

Domain 4: Manage Budgeting (10-15%)

Budget Planning

• Budget Models: Create scenarios (baseline, optimistic, pessimistic).
• Planning Process: Define workflow stages from draft to approved.
• Allocation Methods: Distribute budget across periods, accounts, or dimensions.
• Budget Security: Restrict access by organizational hierarchy or dimensions.

Budget Control

• Budget Register Entries: Record approved budget in general ledger.
• Source Documents: Select which documents to check (requisitions, POs, invoices).
• Dimension Configuration: Define dimensions included in budget checking.
• Available Funds Calculation: Budget - (Actuals + Encumbrances + Pre-encumbrances).

Budget Transactions

• Original Budget: Initial approved budget amount.
• Budget Revision: Increase or decrease total budget authorization.
• Budget Transfer: Move budget between accounts/dimensions within same total.
• Carry-Forward: Roll unused budget to next fiscal year (if enabled).

Domain 5: Manage Fixed Assets (10-15%)

Fixed Asset Configuration

• Fixed Asset Groups: Categorize assets with similar characteristics.
• Value Models/Books: Define depreciation calculation methods and posting layers.
• Depreciation Profiles: Specify depreciation method (straight-line, declining balance, etc.).
• Posting Profiles: Control GL accounts for asset transactions.

Depreciation Methods

• Straight-Line: Equal depreciation each period (Cost - Salvage) / Useful Life.
• Declining Balance: Accelerated depreciation on declining book value.
• Units of Production: Depreciation based on actual usage/production.
• MACRS: Modified Accelerated Cost Recovery System for US tax depreciation.

Depreciation Conventions

• Half-Year: Depreciate 6 months regardless of acquisition date.
• Full Month: Begin depreciation first day of month following acquisition.
• Mid-Quarter: Based on quarter of acquisition (US tax requirement).
• Mid-Month: Begin depreciation mid-month of acquisition.

Asset Transactions

• Acquisition: Record asset purchase increasing asset cost.
• Depreciation: Record periodic depreciation expense and accumulated depreciation.
• Write-Down: Reduce asset value due to impairment.
• Disposal: Remove asset from books, calculate gain/loss on sale.

Key Exam Topics

Financial Dimensions Best Practices

• Limit to 10-15 dimensions maximum for performance
• Use shared dimensions for consistency across legal entities
• Implement advanced rules to enforce valid combinations
• Consider reporting and analysis needs when designing structure

Period-End Close Process

1. Complete all subledger transactions (AR, AP, inventory)
2. Transfer subledger to general ledger
3. Run inventory close
4. Calculate and post depreciation
5. Post period-end adjustments and accruals
6. Run allocation journals
7. Review trial balance and financial statements
8. Close period (prevent additional postings)

Common Configuration Mistakes

• Not testing posting profiles before go-live
• Inadequate budget control dimension configuration
• Missing exchange rates for foreign currency transactions
• Incorrect matching policy tolerances causing excessive exceptions
• Depreciation conventions not matching tax requirements

Exam Preparation Tips

• Practice in a trial environment to understand configuration screens
• Understand the relationship between subledgers and general ledger
• Know when to use posting definitions vs. allocation rules
• Memorize key depreciation method calculations
• Understand budget control dimension configuration
• Review Microsoft Learn documentation for each domain
• Take all three practice exams to identify knowledge gaps