- A
Management groups to organize the subscriptions into a hierarchy.
Management groups are designed to organize subscriptions above the subscription level. They provide the hierarchy needed to apply governance consistently across sets of subscriptions.
- B
Tags on resources to record department and environment values.
Tags are the right mechanism for storing ownership metadata on resources. They support reporting and filtering by business attributes such as department and environment.
- C
Resource locks to group subscriptions by business unit.
Why wrong: Resource locks protect resources from deletion or modification; they do not organize subscriptions or store ownership metadata. They solve a protection problem, not a reporting problem.
- D
Availability sets to group applications by department.
Why wrong: Availability sets are a compute resiliency feature, not a governance or organizational tool. They have nothing to do with subscription hierarchy or ownership reporting.
- E
Private endpoints to separate Finance from HR.
Why wrong: Private endpoints control network access to specific services. They do not provide subscription grouping or resource ownership metadata for governance reporting.
AZ-104 Manage Azure Identities and Governance Practice Question
This AZ-104 practice question tests your understanding of manage azure identities and governance. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. 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.
Finance, HR, and Engineering each use separate subscriptions. The compliance team wants a simple hierarchy that lets them apply governance to groups of subscriptions and produce resource ownership reports by department and environment. Which two features should the administrator use? Select two.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Management groups to organize the subscriptions into a hierarchy.
Management groups (A) are correct because they allow you to organize multiple subscriptions into a hierarchical structure for applying governance policies and role-based access control at scale. This directly supports the compliance team's need to apply governance to groups of subscriptions and produce resource ownership reports by department and environment.
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.
- ✓
Management groups to organize the subscriptions into a hierarchy.
Why this is correct
Management groups are designed to organize subscriptions above the subscription level. They provide the hierarchy needed to apply governance consistently across sets of subscriptions.
Related concept
Read the scenario before looking for a memorised answer.
- ✓
Tags on resources to record department and environment values.
Why this is correct
Tags are the right mechanism for storing ownership metadata on resources. They support reporting and filtering by business attributes such as department and environment.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Resource locks to group subscriptions by business unit.
Why it's wrong here
Resource locks protect resources from deletion or modification; they do not organize subscriptions or store ownership metadata. They solve a protection problem, not a reporting problem.
- ✗
Availability sets to group applications by department.
Why it's wrong here
Availability sets are a compute resiliency feature, not a governance or organizational tool. They have nothing to do with subscription hierarchy or ownership reporting.
- ✗
Private endpoints to separate Finance from HR.
Why it's wrong here
Private endpoints control network access to specific services. They do not provide subscription grouping or resource ownership metadata for governance reporting.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse resource locks with management groups for organizational control, or think availability sets or private endpoints can serve as grouping mechanisms for governance, when they are designed for entirely different purposes (high availability and network security, respectively).
Detailed technical explanation
How to think about this question
Management groups can be nested up to six levels deep, and each subscription can belong to only one management group. When you apply an Azure Policy or RBAC role at a management group level, it is inherited by all child subscriptions and resources, enabling centralized governance. Tags (B) are key-value pairs that can be applied to resources, resource groups, or subscriptions, and they are essential for filtering and reporting by department and environment, as they can be used in Azure Resource Graph queries to produce ownership reports.
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.
What to study next
Got this wrong? Here's your next step.
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FAQ
Questions learners often ask
What does this AZ-104 question test?
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: Management groups to organize the subscriptions into a hierarchy. — Management groups (A) are correct because they allow you to organize multiple subscriptions into a hierarchical structure for applying governance policies and role-based access control at scale. This directly supports the compliance team's need to apply governance to groups of subscriptions and produce resource ownership reports by department and environment.
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.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
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Last reviewed: Jun 11, 2026
This AZ-104 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the AZ-104 exam.
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