Q:

A pharmaceutical company operates organizations in the United States, Canada, and Mexico.

You set up the internal organizational structure in Dynamics 365 Finance. Each organization must use the local currency and comply with the local tax laws.

You need to determine which organizational model to use.

What should you use?

This item tests the candidate's knowledge of modelling an internal organizational structure in Dynamics 365 Finance.

A legal entity is an organization that has a registered or legislated legal structure. Organizations that use different functional currencies must model the organizations as legal entities. Also, a legal entity is subject to the tax laws of the tax authority in the country/region where the legal entity is registered. The stated requirements need a multi-currency, multi-organization structure that is achieved with legal entities. An operating unit is an organization that is used to divide the control of economic resources and operational processes in a business. Operating units use the country/region context of the parent legal entity and must share a functional currency. An operating unit does not meet the stated requirements because each organization must be localized to each country/region and currency. A business unit is a type of operating unit that is created to meet strategic business objectives. It is used for financial reporting that is based on industries or product lines that the organization serves independently of legal entities. A cost center is a type of operating unit in which managers are accountable for budgeted and actual expenditures. Cost centers are used for the management and operational control of business processes that span legal entities.

Decide whether to model internal organizations as legal entities or operating units (cont.) - Training | Microsoft Learn

Organizations and organizational hierarchies overview - Finance & Operations | Dynamics 365 | Microsoft Learn