AZ-104 Manage Azure Identities and Governance Practice Question
This AZ-104 practice question tests your understanding of manage azure identities and governance. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
Exhibit
Script context:
- The script runs on an Azure VM
- Azure CLI is installed
- The VM has been assigned a managed identity
- The script needs to call Azure Resource Manager in another subscription
- No stored credentials are allowed on the VM
Based on the exhibit, a script running on an Azure VM must create resources in another subscription without using passwords or client secrets. Which command should the administrator use first?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "first"
Why it matters: Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
Clue: "which command"
Why it matters: Tests specific CLI syntax. Recall the exact command and its required context — near-synonyms and partial matches are common distractors.
Script context:
- The script runs on an Azure VM
- Azure CLI is installed
- The VM has been assigned a managed identity
- The script needs to call Azure Resource Manager in another subscription
- No stored credentials are allowed on the VM
A
az login --identity
This command signs in the Azure CLI by using the VM's managed identity instead of a stored username or secret. It is the correct first step when a script on an Azure VM needs to access Azure resources securely without embedded credentials.
B
az login --service-principal
Why wrong: This requires a client secret or certificate, which the scenario explicitly forbids. It is not the secret-free approach requested.
C
az account set --subscription <subscriptionId>
Why wrong: Selecting a subscription is useful after signing in, but it does not perform authentication by itself. The script still needs to authenticate first.
D
Connect-AzAccount -UseDeviceAuthentication
Why wrong: This is an interactive PowerShell sign-in method and is not the best fit for a noninteractive script running on a VM.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
az login --identity
Option A is correct because the script must authenticate without passwords or client secrets, and Azure VMs can use a managed identity for this purpose. The `az login --identity` command authenticates the Azure CLI using the VM's managed identity, which is a passwordless, secretless authentication method. This allows the script to obtain tokens for accessing resources in another subscription, provided the managed identity has appropriate RBAC permissions.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✓
az login --identity
Why this is correct
This command signs in the Azure CLI by using the VM's managed identity instead of a stored username or secret. It is the correct first step when a script on an Azure VM needs to access Azure resources securely without embedded credentials.
Clue confirmation
The clue words "first", "which command" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
✗
az login --service-principal
Why it's wrong here
This requires a client secret or certificate, which the scenario explicitly forbids. It is not the secret-free approach requested.
✗
az account set --subscription <subscriptionId>
Why it's wrong here
Selecting a subscription is useful after signing in, but it does not perform authentication by itself. The script still needs to authenticate first.
✗
Connect-AzAccount -UseDeviceAuthentication
Why it's wrong here
This is an interactive PowerShell sign-in method and is not the best fit for a noninteractive script running on a VM.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse setting the subscription context (`az account set`) with authentication, forgetting that authentication must occur first before any subscription-level operations can be performed.
Trap categories for this question
Scenario analysis trap
This requires a client secret or certificate, which the scenario explicitly forbids. It is not the secret-free approach requested.
Detailed technical explanation
How to think about this question
Managed identities in Azure provide an automatically managed identity in Azure AD, allowing VMs to authenticate to any service that supports Azure AD authentication without storing credentials. Under the hood, the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254 provides an access token for the managed identity, which the Azure CLI uses to authenticate. In a real-world scenario, you would assign a user-assigned managed identity to the VM and grant it Contributor or Reader permissions on the target subscription to create or manage resources.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this AZ-104 question in full detail.
Manage Azure Identities and Governance — This question tests Manage Azure Identities and Governance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: az login --identity — Option A is correct because the script must authenticate without passwords or client secrets, and Azure VMs can use a managed identity for this purpose. The `az login --identity` command authenticates the Azure CLI using the VM's managed identity, which is a passwordless, secretless authentication method. This allows the script to obtain tokens for accessing resources in another subscription, provided the managed identity has appropriate RBAC permissions.
What should I do if I get this AZ-104 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Are there clue words in this question I should notice?
Yes — watch for: "first", "which command". Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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