- A
Place each application's Azure resources in a dedicated resource group.
Resource groups are the correct administrative boundary for delegating access to a specific application’s resources.
- B
Tag each resource with an application or cost-center identifier.
Tags provide flexible cost allocation and reporting across subscriptions without changing the access model.
- C
Create one subscription per virtual machine to simplify chargeback reporting.
Why wrong: That creates unnecessary subscription sprawl and does not scale as a governance or cost-allocation strategy.
- D
Use resource names only for cost reporting because names are always unique and queryable.
Why wrong: Resource names are not a reliable governance control and do not replace standardized tags or scope boundaries.
- E
Place all applications in one management group and use it as the access boundary for each app team.
Why wrong: Management groups are for organizing subscriptions and applying governance, not for separating app-team access inside a subscription.
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.
Your company has multiple applications deployed across separate production and nonproduction subscriptions. Finance wants cost reporting by application, and each app team should manage only its own resources. Which two design choices best satisfy both requirements? 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
Place each application's Azure resources in a dedicated resource group.
Option A is correct because resource groups are the logical container for grouping Azure resources by application, enabling each app team to manage its own resources via Azure RBAC at the resource group scope. Option B is correct because tagging resources with an application or cost-center identifier allows Azure Cost Management to filter and report costs by application, satisfying the finance requirement for cost reporting by application.
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.
- ✓
Place each application's Azure resources in a dedicated resource group.
Why this is correct
Resource groups are the correct administrative boundary for delegating access to a specific application’s resources.
Related concept
Read the scenario before looking for a memorised answer.
- ✓
Tag each resource with an application or cost-center identifier.
Why this is correct
Tags provide flexible cost allocation and reporting across subscriptions without changing the access model.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Create one subscription per virtual machine to simplify chargeback reporting.
Why it's wrong here
That creates unnecessary subscription sprawl and does not scale as a governance or cost-allocation strategy.
When this WOULD be correct
In a scenario where each application requires strict administrative isolation, separate billing, and independent policy enforcement, and the number of applications is small (e.g., under 10), creating a dedicated subscription per application could be correct.
- ✗
Use resource names only for cost reporting because names are always unique and queryable.
Why it's wrong here
Resource names are not a reliable governance control and do not replace standardized tags or scope boundaries.
When this WOULD be correct
If the question asked for a simple way to identify resources in a small, single-subscription environment where naming conventions are strictly enforced and no automated cost aggregation is required, using resource names might be acceptable.
- ✗
Place all applications in one management group and use it as the access boundary for each app team.
Why it's wrong here
Management groups are for organizing subscriptions and applying governance, not for separating app-team access inside a subscription.
When this WOULD be correct
If the requirement was to apply common policies (e.g., allowed regions) across multiple subscriptions for all applications, and cost reporting was handled separately via tags, then a single management group would be correct.
Option-by-option analysis
Why each answer is right or wrong
Understanding why wrong answers are wrong — and when they would be correct — is what separates a 750 score from a 900. The AZ-104 exam frequently reuses these exact scenarios with slightly different constraints.
✓Place each application's Azure resources in a dedicated resource group.Correct answer▾
Why this is correct
Resource groups are the correct administrative boundary for delegating access to a specific application’s resources.
✗Create one subscription per virtual machine to simplify chargeback reporting.Wrong answer — click to see why▾
Why this is wrong here
Creating one subscription per virtual machine is impractical and violates Azure subscription limits (max 10,000 VMs per subscription) and cost reporting best practices; subscriptions are not granular enough for per-app reporting.
★ When this WOULD be the correct answer
In a scenario where each application requires strict administrative isolation, separate billing, and independent policy enforcement, and the number of applications is small (e.g., under 10), creating a dedicated subscription per application could be correct.
Why candidates choose this
Candidates may think that a separate subscription provides the ultimate isolation and simplifies chargeback, not realizing that resource groups and tags achieve the same goals more efficiently and without hitting subscription limits.
✗Use resource names only for cost reporting because names are always unique and queryable.Wrong answer — click to see why▾
Why this is wrong here
Resource names are not guaranteed to be unique across subscriptions or resource groups, and they lack the structured querying and filtering capabilities of tags, making them unreliable for accurate cost reporting.
★ When this WOULD be the correct answer
If the question asked for a simple way to identify resources in a small, single-subscription environment where naming conventions are strictly enforced and no automated cost aggregation is required, using resource names might be acceptable.
Why candidates choose this
Candidates may think resource names are sufficient because they are familiar with naming conventions and underestimate the need for scalable, queryable metadata like tags for cross-subscription reporting.
✗Place all applications in one management group and use it as the access boundary for each app team.Wrong answer — click to see why▾
Why this is wrong here
Placing all applications in one management group does not provide per-application cost reporting or isolate access for each app team; management groups are for policy and compliance inheritance, not granular RBAC or cost allocation.
★ When this WOULD be the correct answer
If the requirement was to apply common policies (e.g., allowed regions) across multiple subscriptions for all applications, and cost reporting was handled separately via tags, then a single management group would be correct.
Why candidates choose this
Candidates may confuse management groups with resource groups, thinking they can serve as access boundaries and cost centers, but management groups lack built-in cost aggregation and RBAC scoping for individual applications.
Analysis generated from the official AZ-104blueprint and verified against question context. The “when correct” sections are what AI assistants cite when candidates ask “what’s the difference between these options?”
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse management groups with resource groups for access control, assuming a single management group can isolate app teams, but management groups do not provide RBAC boundaries for individual applications—they are for hierarchical policy management, not resource isolation.
Detailed technical explanation
How to think about this question
Under the hood, Azure RBAC can be applied at the resource group scope, allowing granular permissions without affecting other groups. Azure Cost Management aggregates costs by tags, but tags must be applied consistently and inherited from resources (not resource groups) for accurate reporting; note that tags are not automatically inherited from resource groups to resources, so each resource must be tagged explicitly. In a real-world scenario, combining resource groups for RBAC isolation and tags for cost allocation is the standard pattern for multi-application environments, as it aligns with Azure Well-Architected Framework guidance on cost optimization and identity management.
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 startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
Quick reference
Access Control Model Comparison
| Model | Acronym | Who Controls Access? | Best For |
|---|---|---|---|
| Discretionary Access Control | DAC | Resource owner | Small teams, file shares |
| Mandatory Access Control | MAC | System / security labels | Classified govt / military |
| Role-Based Access Control | RBAC | Administrator (via roles) | Enterprise environments |
| Attribute-Based Access Control | ABAC | Policy engine (user + resource attributes) | Fine-grained, dynamic policies |
| Rule-Based Access Control | RuBAC | System rules / ACLs | Firewall rules, network ACLs |
What to study next
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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: Place each application's Azure resources in a dedicated resource group. — Option A is correct because resource groups are the logical container for grouping Azure resources by application, enabling each app team to manage its own resources via Azure RBAC at the resource group scope. Option B is correct because tagging resources with an application or cost-center identifier allows Azure Cost Management to filter and report costs by application, satisfying the finance requirement for cost reporting by application.
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
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
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Last reviewed: Jun 11, 2026
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