Learn how to effectively manage exchange rate fluctuations in Microsoft Dynamics 365 Finance by running the foreign currency revaluation process. Discover the best practices for accurate financial reporting in a multinational environment.
Table of Contents
Question
A multinational corporation is using Microsoft Dynamics 365 Finance to manage their accounts payable across various currencies. They have noticed significant fluctuations in exchange rates, affecting the book value of open transactions. You need to ensure that the open transactions are revalued to reflect the current exchange rates, minimizing the impact of currency fluctuations on financial reporting. What should you do?
A. Adjust the book value of open transactions manually in the General ledger to match the current exchange rates.
B. Freeze the exchange rates for a period until the currency fluctuations stabilize.
C. Instruct the accounts payable team to only process transactions in the company’s base currency.
D. Run the foreign currency revaluation process for Accounts payable using the ‘Standard’ method and the most recent exchange rates.
Answer
D. Run the foreign currency revaluation process for Accounts payable using the ‘Standard’ method and the most recent exchange rates.
Explanation
Running the foreign currency revaluation process using the ‘Standard’ method will automatically update the book value of open transactions based on the most recent exchange rates, which is the correct approach to minimize the impact of currency fluctuations. Manually adjusting the book value in the General ledger is error-prone and not scalable. Freezing the exchange rates does not reflect the current market conditions and could lead to inaccurate financial reporting. Processing transactions only in the base currency is impractical for a multinational corporation dealing with multiple currencies.
Microsoft Dynamics 365 Finance Functional Consultant MB-310 certification exam assessment practice question and answer (Q&A) dump including multiple choice questions (MCQ) and objective type questions, with detail explanation and reference available free, helpful to pass the Microsoft Dynamics 365 Finance Functional Consultant MB-310 exam and earn Microsoft Dynamics 365 Finance Functional Consultant MB-310 certification.