Drag and Drop Question You are configuring a Dynamics 365 Finance environment for intercompany accounting. You create the following legal entities: - CompanyA - CompanyB You need to configure…

Question

Exhibit

Answer Area

Explanation

Intercompany Accounting Setup in Dynamics 365 Finance

Why This Order?

Intercompany accounting in D365 Finance follows a dependency chain: you must create the foundational ledger accounts first, then configure the journal mechanism, then define the intercompany relationship rules. Each step depends on the previous one existing.

Step-by-Step Breakdown

Step 1: Configure intercompany main accounts using the Balance sheet account type

This is the non-negotiable first step. D365 Finance requires "Due to" and "Due from" accounts to exist in each legal entity's chart of accounts before any intercompany setup can reference them.

• The account type must be Balance sheet - these accounts represent intercompany receivables and payables, which are balance sheet items (assets/liabilities).
• The Common account type is a distractor and is incorrect here. "Common" is used for shared/cross-module accounts, not for intercompany clearing accounts. Selecting "Common" is the most common mistake on this topic.
• Must be done in each legal entity (CompanyA and CompanyB independently).

Step 2: Configure a journal name with Journal type set to Daily

With accounts in place, each legal entity needs a journal configured to post intercompany entries through.

• Intercompany transactions post through Daily journals - this is the required journal type in D365 Finance for general ledger intercompany entries.
• This journal name is referenced later when you set up the intercompany accounting relationship (step 3), so it must exist first.
• Again, must be done in each legal entity separately.

Step 3: Determine which legal entity will receive the accounting for supporting amounts

This is the actual intercompany accounting configuration step (found at General Ledger > Posting setup > Intercompany accounting). Here you define the "from/to" relationship between legal entities and specify:

• Which company books supporting entries (e.g., tax, financial dimensions)
• The Due to/Due from accounts to use (referencing step 1)
• The journal to post through (referencing step 2)

This step can only be completed after steps 1 and 2 because it directly references both the accounts and journal names.

Why the Other Items Are Wrong

Key Misconception to Avoid

Many candidates confuse account type = Common with intercompany accounts because "Common" sounds like it would apply across companies. In D365 Finance, "Common" refers to accounts usable across modules within a single entity - it has nothing to do with cross-entity posting. Always use Balance sheet for Due to/Due from accounts.

No community discussion yet for this question.