What Is a Cost Element in Dynamics 365 Finance?
Question
A company has recently deployed Microsoft Dynamics 365 Finance.You have been hired as a Functional Consultant.
Your role will include the management of the Dynamics 365 Finance system and to provide training for members of the Accounts team.
You are providing training on the cost accounting module in the Dynamics 365 Finance system.
Which of the following statements describes a cost element?
Answers
Explanations
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A. B. C. D.B.
https://docs.microsoft.com/en-us/dynamics365/unified-operations/financials/cost-accounting/terms-cost-accountingIn Microsoft Dynamics 365 Finance, cost elements are used to
In the context of the cost accounting module in Microsoft Dynamics 365 Finance, a cost element can be described as follows:
A. The result of a transfer via data connectors from general ledger entries, cost allocations, and posted cost entries in cost journals.
This statement does not accurately describe a cost element. It seems to refer to the process of transferring data from different sources, such as general ledger entries, cost allocations, and cost journals, to generate cost elements. However, it does not provide a definition or explanation of what a cost element is.
B. Used as a function to track and categorize costs.
This statement provides a more accurate description of a cost element. In Dynamics 365 Finance, a cost element is used as a function or tool to track and categorize costs within the system. It helps in organizing costs based on various criteria, such as cost type, cost category, or cost behavior.
C. Classifies costs according to their behavior in relation to changes in key business activities.
This statement describes the purpose of cost behavior classification, but it does not specifically define a cost element. Cost behavior classification is an important aspect of cost accounting, which involves categorizing costs based on how they change in response to changes in key business activities. However, it does not provide a detailed explanation of what a cost element is in the Dynamics 365 Finance system.
D. Used to distribute cost from one cost object to one or more other cost objects by applying a relevant allocation base.
This statement accurately describes one of the primary functions of a cost element in Dynamics 365 Finance. A cost element is used to distribute costs from one cost object (such as a cost center, project, or product) to one or more other cost objects by applying a relevant allocation base. This allocation process helps in accurately assigning costs to different cost objects, enabling better cost analysis and decision-making.
In summary, the most accurate and detailed explanation of a cost element in the context of the Dynamics 365 Finance system is:
B. Used as a function to track and categorize costs.
Additionally, statement D is also relevant as it describes the distribution function of a cost element.
