- A
Place all resources in one subscription and separate them only by resource group
Why wrong: This simplifies management but does not meet the requirement for separate billing and admin boundaries.
- B
Create a management group for each business unit and place that unit's subscriptions underneath it
Management groups provide a level above subscriptions, making them ideal for consistent policy assignment across multiple subscriptions in a business unit.
- C
Assign the policy at each resource group because policies cannot target subscriptions
Why wrong: Azure Policy can be assigned at management group, subscription, resource group, or resource scope.
- D
Create one resource group per business unit inside a shared subscription
Why wrong: Resource groups do not provide separate subscription billing or a strong enough boundary for the requirement.
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.
A company has three business units. Each business unit needs its own subscription for billing and admin delegation. Corporate security wants one policy assignment to cover all current and future subscriptions in each business unit. What structure should you implement?
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
Create a management group for each business unit and place that unit's subscriptions underneath it
Management groups allow you to aggregate multiple subscriptions under a single hierarchy, enabling policy assignment at the management group level that applies to all current and future subscriptions within that group. This meets the requirement for per-business-unit billing isolation (via separate subscriptions) and centralized policy enforcement across all subscriptions in each unit.
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 all resources in one subscription and separate them only by resource group
Why it's wrong here
This simplifies management but does not meet the requirement for separate billing and admin boundaries.
- ✓
Create a management group for each business unit and place that unit's subscriptions underneath it
Why this is correct
Management groups provide a level above subscriptions, making them ideal for consistent policy assignment across multiple subscriptions in a business unit.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Assign the policy at each resource group because policies cannot target subscriptions
Why it's wrong here
Azure Policy can be assigned at management group, subscription, resource group, or resource scope.
- ✗
Create one resource group per business unit inside a shared subscription
Why it's wrong here
Resource groups do not provide separate subscription billing or a strong enough boundary for the requirement.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates may think resource groups are sufficient for isolation and policy enforcement, overlooking that management groups provide subscription-level aggregation and inheritance that resource groups cannot achieve across multiple subscriptions.
Detailed technical explanation
How to think about this question
Management groups form a hierarchical structure up to six levels deep, with Azure Policy inheritance flowing from the root management group down through all child management groups and subscriptions. When a policy is assigned at a management group, it applies to all subscriptions under that group, including subscriptions created later, ensuring consistent governance without manual reconfiguration. This is critical for enterprises with dynamic subscription growth or acquisitions.
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.
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: Create a management group for each business unit and place that unit's subscriptions underneath it — Management groups allow you to aggregate multiple subscriptions under a single hierarchy, enabling policy assignment at the management group level that applies to all current and future subscriptions within that group. This meets the requirement for per-business-unit billing isolation (via separate subscriptions) and centralized policy enforcement across all subscriptions in each unit.
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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