MB-310 · Question #214
Drag and Drop Question A company is implementing Dynamics 365 Finance. The company needs the ability to handle deferring revenue, reallocations, revenue schedules, and milestone-based recognition…
The correct answer is Revenue schedule; Revenue recognition journal. Dynamics 365 Finance - Revenue Recognition Configuration Context This question covers the Revenue Recognition module in D365 Finance. The module handles ASC 606/IFRS 15 compliance by deferring, scheduling, and recognizing revenue systematically. Understanding the distinction…
Question
Exhibit
Answer Area
Drag items
Correct arrangement
- Revenue schedule
- Revenue recognition journal
Explanation
Dynamics 365 Finance - Revenue Recognition Configuration
Context
This question covers the Revenue Recognition module in D365 Finance. The module handles ASC 606/IFRS 15 compliance by deferring, scheduling, and recognizing revenue systematically. Understanding the distinction between setup objects and transactional objects is key.
Correct Arrangement Explained
Position 1 → Revenue schedule
What it is: A revenue schedule defines the template for how and when deferred revenue should be recognized - number of periods, frequency (monthly, quarterly, etc.), and the basis for allocation.
Why it goes first: Revenue schedules are configuration/setup objects. You must define the schedule before any recognition can occur. They directly answer the requirement to "handle revenue schedules" and are the foundation for deferring revenue - when a sale is made, assigning a revenue schedule to the item defers recognition automatically across the defined periods.
Think of it as the blueprint: it tells the system when to recognize revenue, not that it has been recognized.
Position 2 → Revenue recognition journal
What it is: The revenue recognition journal is the transactional mechanism that actually posts the deferred revenue into the general ledger as earned. It reads the schedules and creates accounting entries.
Why it goes second: This is the operational step - it consumes the revenue schedule and moves amounts from deferred revenue accounts to recognized revenue accounts. It cannot function without a schedule defined first (Position 1).
Think of it as the execution: it says this revenue is now earned and posted.
Why the Other Options Are Not in These Positions
| Item | Purpose | When Used |
|---|---|---|
| Recognition basis | Defines how recognition is triggered (date, milestone, percentage) | Used inside revenue schedule setup for milestone-based recognition |
| Update contract terms | Handles reallocation when contract modifications occur | Used post-sale when terms change and transaction price must be redistributed |
Common misconception: Many candidates select "Recognition basis" for milestone-based recognition as a standalone answer. It is not a standalone feature - it is a field/parameter within the revenue schedule configuration, not a separate drag target.
Another common mistake: Confusing "Update contract terms" (for reallocations/modifications) with the revenue recognition journal (for posting). Reallocations happen at the contract level; journal posting happens at the ledger level.
Summary Flow
Revenue schedule (setup/config)
↓
Revenue recognition journal (posts earned revenue to GL)
The remaining requirements - reallocations → Update contract terms, milestone-based recognition → Recognition basis - are handled by items not shown in the final two-slot answer, suggesting the full question likely had four requirement slots with only these two displayed.
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