Struggling with volatile currency exchange rates in Dynamics 365 Finance? Learn how to minimize risk on accounts payable with vendor change approvals and foreign currency revaluations.
Table of Contents
Question
Adventure Works Cycles has recently expanded its operations to a country with volatile currency exchange rates. The finance team needs to manage the risk associated with foreign currency transactions. You need to implement a strategy that minimizes the risk of currency exchange rate fluctuations on accounts payable. What should you do?
A. Convert all foreign currency invoices to the local currency at the time of transaction entry.
B. Enable and configure vendor change approvals and perform regular foreign currency revaluations.
C. Negotiate with vendors to accept payments in the company’s base currency only.
D. Restrict vendor transactions to only those that use fixed exchange rate contracts.
Answer
B. Enable and configure vendor change approvals and perform regular foreign currency revaluations.
Explanation
Enabling and configuring vendor change approvals along with performing regular foreign currency revaluations allows the company to manage and monitor the risk associated with currency fluctuations effectively. Restricting transactions to fixed exchange rate contracts is not always feasible and may not be accepted by all vendors. Converting invoices to local currency at the time of entry does not protect against future fluctuations. Negotiating with vendors to accept only the base currency is impractical and may not be favorable for international vendors.
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.