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3.1 Custom & Entity-Backed Financial Dimensions

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Microsoft Certified: Dynamics 365 Finance Functional Consultant Associate MB-310

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1 Chapter 1: MB-310 Exam Overview & Financial Architecture

1.1 MB-310 Exam Structure, Skills Measured & Consultant Role 1.2 Dynamics 365 Finance Architecture, Legal Entities & Global Address Book 1.3 Hands-on Lab Strategy & Preparation Framework

2 Chapter 2: Chart of Accounts & Main Accounts

2.1 Designing Chart of Accounts & Main Account Types 2.2 Main Account Categories & Ledger Account Aliases 2.3 Balance Control Accounts & Year-End Opening Account Setup 2.4 Legal Entity Overrides for Main Accounts & Dimensions

3 Chapter 3: Financial Dimensions & Account Structures

3.1 Custom & Entity-Backed Financial Dimensions 3.2 Financial Tags: Limits, Storage & Ledger Settlement Use 3.3 Account Structures, Segment Criteria & Activation 3.4 Advanced Rules & Advanced Rule Structures 3.5 Derived Dimensions & Dimension Default Templates

4 Chapter 4: Ledgers, Calendars & Currencies

4.1 Fiscal Calendars, Period Statuses & Module Access Control 4.2 Posting Layers, Multi-GAAP Reporting & the Ledger Form 4.3 Currency Exchange Types, Rate Providers & Triangulation 4.4 Accounting & Reporting Currencies (Dual-Currency Architecture) 4.5 Foreign Currency Revaluation & Revaluation Posting Profiles

5 Chapter 5: General Ledger Journals & Allocations

5.1 Journal Names & Voucher Number Sequences 5.2 Journal Control & Posting Restriction Rules 5.3 Journal Entry, the One-Voucher Rule, Validation & Posting 5.4 Reversals, Storno Corrections & Excel Integration 5.5 Ledger Allocation Rules & the Four Allocation Methods 5.6 Allocation Processing & Periodic (Recurring) Journals

6 Chapter 6: Intercompany Accounting & Settlements

6.1 Intercompany Accounting Setup & Due-To / Due-From Postings 6.2 Intercompany Journal Processing & Multi-Company Vouchers 6.3 Ledger Settlements Configuration & Processing

7 Chapter 7: Cash and Bank Management

7.1 Bank Groups, Bank Accounts & Ledger Integration 7.2 Payment Formats, Bank FX Revaluation & Shared Payment Setup 7.3 Manual vs. Advanced Bank Reconciliation & Statement Formats 7.4 Matching Rule Sets, Reconciliation Execution & Reversals 7.5 Cash Flow Forecasting Setup & Automation 7.6 Customer and Vendor Netting

8 Chapter 8: Periodic Closing & Financial Consolidations

8.1 Financial Period Close Workspace, Closing Roles & Schedules 8.2 Year-End Close Configuration & General Ledger Balance Carryforward 8.3 Consolidations Online: Legal Entity Setup, COA Mapping & Currency Translation 8.4 Import Consolidations & Intercompany Elimination Rules

9 Chapter 9: Sales Tax & Withholding Tax

9.1 Sales Tax Engine Hierarchy, Authorities & Settlement Periods 9.2 Ledger Posting Groups, Sales Tax Codes & Calculation Methods 9.3 Sales Tax Groups, Item Sales Tax Groups & Tax Exemptions 9.4 Sales Tax Adjustments and Settle and Post Sales Tax 9.5 Withholding Tax & US 1099 Vendor Reporting

10 Chapter 10: Accounts Receivable Setup & Invoicing

10.1 Customer Master, Customer Groups & Shared Customers 10.2 Customer Posting Profiles & Account Code Precedence 10.3 Free Text Invoices, Recurring Invoice Templates & AR Charges 10.4 Sales Order Invoicing, Billing Classifications & Prepayments 10.5 Customer Payment Methods, Payment Processing & Customer Bank Accounts

11 Chapter 11: Credit Management & Collections

11.1 Credit Management Architecture & Customer Credit Groups 11.2 Risk Scoring, Credit Limits, Blocking Rules & Credit Holds 11.3 Aging Definitions, Collections Workspace & Customer Pools 11.4 Collection Letter Sequences & Interest Notes 11.5 Customer Write-Offs, Bad Debt & Write-Off Reversals

12 Chapter 12: Subscription Billing & Revenue Deferrals

12.1 Recurring Contract Billing, Billing Schedules & Milestones 12.2 Deferral Principles, Deferral Defaults & Schedule Calculation Methods 12.3 Recognition Processing, Expense Deferrals & Modifying Schedules 12.4 Multiple Element Revenue Allocation (MEA / ASC 606)

13 Chapter 13: Accounts Payable & Invoice Processing

13.1 Shared Vendors, Global Address Book & Vendor Groups 13.2 Vendor Posting Profiles, AP Parameters & Vendor Bank Accounts 13.3 Invoice Matching Setup (2-Way, 3-Way), Tolerances & Exceptions 13.4 Vendor Invoicing Methods, Journals & Invoice Automation

14 Chapter 14: Vendor Payments & Expense Management

14.1 Methods of Payment & the Vendor Payment Proposal Engine 14.2 Generating Payments, Centralized Payments & Check Lifecycle 14.3 Expense Management Configuration, Categories & Policies 14.4 Expense Reports Processing, Mobile Receipts & Intercompany Expenses

15 Chapter 15: Budgeting & Budget Control

15.1 Budget Models, Budget Codes & Allocation Terms 15.2 Budget Register Entries, Workflows & Budget vs. Actual 15.3 Budget Transfer Rules & Processing Budget Transfers 15.4 Budget Control Configuration, Cycles, Rules & Budget Groups 15.5 Budget Funds Available, Over-Budget Permissions & Document Budget Check 15.6 Budget Planning Framework, Organization Hierarchies & Planning Processes 15.7 Budget Plans, Scenarios, Allocations & Generating Register Entries

16 Chapter 16: Fixed Assets Configuration & Transactions

16.1 Fixed Asset Groups, Asset Records & Group/Book Mapping 16.2 Depreciation Profiles: Methods & Conventions 16.3 Fixed Asset Books, Derived Books & Posting Profiles 16.4 Fixed Asset Acquisition Pathways 16.5 Depreciation Proposals, Multi-Company Runs & Fixed Asset Budgets 16.6 Fixed Asset Disposals: Sale, Scrap & Disposal Accounting 16.7 Fixed Asset Splits, Transfers & Reclassification 16.8 Asset Leasing (IFRS 16 / ASC 842)

3.1 Custom & Entity-Backed Financial Dimensions

Key Takeaways Explain This Topic AI

Custom financial dimensions hold an independent value list maintained inside General ledger; entity-backed dimensions draw their values from an operational table such as Customers, Vendors, Projects, or Workers.

Entity-backed dimension values appear automatically when the underlying master record is created — you never add those values by hand.

Dimension value masks (#, &, ?, !) enforce an alphanumeric format on custom dimension values at entry and import time.

A balancing financial dimension set on the Ledger page generates automatic inter-unit due-to/due-from entries so each dimension value balances to zero on every voucher.

Last updated: August 2026

3.1 Custom & Entity-Backed Financial Dimensions

In Microsoft Dynamics 365 Finance, the General Ledger relies on a multi-segmented account model. Rather than creating thousands of discrete main accounts to track operations across departments, cost centers, business units, or projects—a practice known as "chart of accounts inflation"—organizations utilize Financial Dimensions . Financial dimensions serve as data qualifiers that attach to ledger transactions, providing rich operational context for financial analysis, management reporting, and statutory compliance.

1. Architectural Foundations: Custom vs. Entity-Backed Dimensions

When designing financial dimensions ( General ledger > Chart of accounts > Dimensions > Financial dimensions ), a functional consultant must choose between two distinct dimension types: +-----------------------------------------------------------------------------+

  • | FINANCIAL DIMENSION TYPES |
  • +-----------------------------------------------------------------------------+
  • | 1. Custom Financial Dimensions |
  • | - Defined independently within General Ledger |
  • | - Managed manually or imported via Data Management Framework (DMF) |
  • | - Supports Dimension Value Masks for strict format enforcement |
  • | |
  • | 2. Entity-Backed Financial Dimensions |
  • | - Bound directly to system entities (Departments, Vendors, Projects) |
  • | - Dimension values auto-generated when master records are created |
  • | - Lifecycle managed directly within the parent operational module |
  • +-----------------------------------------------------------------------------+
  • Custom Financial Dimensions

Definition : A custom dimension is an independent list of values created and maintained strictly within General Ledger.

Configuration : Select <Custom dimension> in the Use values from dropdown.

Use Cases : Lines of business, sales channels, market segments, strategic initiatives, or regulatory classifications that do not correspond to an existing system entity.

Value Management : Values are added manually via the Financial dimension values action pane button or imported using the Financial dimension values data entity.

Entity-Backed Financial Dimensions

Definition : An entity-backed dimension draws its values directly from an operational master data table.

Available Entities : Business units, Departments, Cost centers, Customers, Vendors, Items (Released products), Projects, Fixed assets, Workers, Agreements, and Legal entities.

Synchronization Mechanics : When a user creates a new record in an operational module (e.g., creating Customer US-004 in Accounts Receivable or Fixed Asset FA-0012 in Fixed Assets), Dynamics 365 Finance automatically inserts a corresponding dimension value into the financial dimension table. You do not need to manually add values to the dimension.

Governance : If a master record is renamed or blocked in the subledger, its status is reflected in the financial dimension values lookup.

Dimension Value Masks

For custom dimensions, organizations often require standard alphanumeric formatting (e.g., cost centers must follow the format CC-### or regional codes must match REG-AA-### ). Dynamics 365 Finance provides Dimension value masks on the financial dimension definition form.

Mask Character Allowed Input Type Description

# Digit only (0–9) Requires a numeric character at this position.

& Letter only (A–Z, a–z) Requires an alphabetic character at this position.

? Letter or Digit (Alphanumeric) Allows any single letter or digit.

! Uppercase letter only Forces capitalization of alphabetic characters.

Constant / Literal Characters (e.g., - , / , CC ) Fixed text that automatically formats the input.

Consultant Note : Dimension value masks are validated only upon manual entry or during DMF import validation; they do not apply retroactively to existing dimension values.

2. Balancing Financial Dimensions (Inter-Unit Accounting)

Many multinational organizations require balanced balance sheets at a sub-entity level (e.g., by Business Unit or Fund) to satisfy statutory or segmental reporting requirements (such as IFRS 8 or US GAAP ASC 280). When a single transaction or journal entry involves multiple business units, the debits and credits for an individual business unit may not balance, even though the voucher balances as a whole.

To resolve this, Dynamics 365 Finance supports Balancing Financial Dimensions ( General ledger > Ledger setup > Ledger ): +-----------------------------------------------------------------------------+

  • | INTER-UNIT BALANCING ARCHITECTURE |
  • +-----------------------------------------------------------------------------+
  • | Single Ledger Parameter: Balancing financial dimension = [BusinessUnit] |
  • | |
  • | Journal Line 1: Debit Expense (MainAccount 601100, BU: 001) $1,000 |
  • | Journal Line 2: Credit Cash (MainAccount 110100, BU: 002) $1,000 |
  • | |
  • | Automated Postings Generated by Ledger Engine: |
  • | Auto Entry 1: Credit Interunit Payable (Account 219900, BU: 001) $1,000 |
  • | Auto Entry 2: Debit Interunit Receivable(Account 139900, BU: 002)$1,000|
  • | |
  • | Result: BU 001 Net Balance = $0.00 | BU 002 Net Balance = $0.00 |
  • +-----------------------------------------------------------------------------+
  • Rules for Balancing Dimensions

Single Dimension Limit : Only one financial dimension per legal entity can be selected as the balancing financial dimension on the Ledger record.

Automatic Posting Accounts : The posting engine relies on accounts configured in General ledger > Posting setup > Accounts for automatic transactions :

  • Interunit - debit (Due from other units / Interunit receivable)
  • Interunit - credit (Due to other units / Interunit payable)

Posting Behavior : During posting, if the sum of debits does not equal the sum of credits for any distinct value of the balancing dimension in a voucher, the system generates balancing debit and credit entries using the designated interunit accounts, stamped with the respective balancing dimension values.