- A
System-assigned managed identity attached to the resource that needs access.
System-assigned managed identities eliminate secrets and are automatically managed for the lifetime of the resource.
- B
User-assigned managed identity that can be attached to multiple Azure resources.
User-assigned managed identities are reusable and centrally managed, which fits shared automation scenarios well.
- C
Service principal with a client secret stored in an app setting.
Why wrong: A client secret is a stored credential and requires ongoing rotation and protection outside Azure identity management.
- D
Shared administrator username and password stored in a Key Vault secret.
Why wrong: This still depends on a password-based credential and is not the preferred secret-free Azure identity approach.
- E
SAS token generated once and reused indefinitely by both resources.
Why wrong: A long-lived SAS token is a secret and is not a robust identity choice for ongoing automation.
Quick Answer
The correct choices are system-assigned managed identity and user-assigned managed identity, as both enable Azure resources to authenticate without storing any secrets. These identity types leverage Azure AD tokens, eliminating the need for manual secret rotation because Azure automatically handles credential lifecycle management. On the AZ-104 exam, this concept tests your understanding of how to secure resource access in scenarios like Azure Automation runbooks or App Services, where you must avoid hardcoded secrets. A common trap is assuming only system-assigned identities work across multiple resources, but user-assigned identities are reusable and can be attached to several resources simultaneously, making them ideal for shared workloads. Remember the mnemonic: "System sticks to one, user unites many" — system-assigned is tied to a single resource, while user-assigned can be shared, both keeping secrets out of code.
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.
An Azure application and an Azure Automation account need Azure access without any stored secrets. The same identity should be reusable and should not require manual secret rotation. Which two identity choices meet the requirement? 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
System-assigned managed identity attached to the resource that needs access.
System-assigned managed identity (Option A) is correct because it is automatically created and tied to a specific Azure resource, such as a virtual machine or App Service, and provides an Azure AD identity that can be used to authenticate to any service supporting Azure AD authentication without storing any secrets. The identity is managed by Azure, eliminating the need for manual secret rotation, and it is automatically deleted when the resource is deleted, ensuring no orphaned secrets.
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.
- ✓
System-assigned managed identity attached to the resource that needs access.
Why this is correct
System-assigned managed identities eliminate secrets and are automatically managed for the lifetime of the resource.
Related concept
Read the scenario before looking for a memorised answer.
- ✓
User-assigned managed identity that can be attached to multiple Azure resources.
Why this is correct
User-assigned managed identities are reusable and centrally managed, which fits shared automation scenarios well.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Service principal with a client secret stored in an app setting.
Why it's wrong here
A client secret is a stored credential and requires ongoing rotation and protection outside Azure identity management.
- ✗
Shared administrator username and password stored in a Key Vault secret.
Why it's wrong here
This still depends on a password-based credential and is not the preferred secret-free Azure identity approach.
- ✗
SAS token generated once and reused indefinitely by both resources.
Why it's wrong here
A long-lived SAS token is a secret and is not a robust identity choice for ongoing automation.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse service principals with managed identities, thinking that storing a client secret in an app setting or Key Vault is acceptable, but the question explicitly requires 'no stored secrets' and 'no manual secret rotation,' which only managed identities satisfy.
Detailed technical explanation
How to think about this question
Managed identities use Azure AD tokens obtained via the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254, which automatically handles token acquisition and renewal without any application code managing secrets. User-assigned managed identities (Option B) are created as standalone Azure resources and can be assigned to multiple Azure resources, making them reusable across different services while still avoiding secret storage. Under the hood, the identity is represented by a service principal in Azure AD, and Azure automatically rotates the underlying certificate used for token signing every 90 days, ensuring zero-touch secret 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 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.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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Manage Azure Identities and Governance — study guide chapter
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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: System-assigned managed identity attached to the resource that needs access. — System-assigned managed identity (Option A) is correct because it is automatically created and tied to a specific Azure resource, such as a virtual machine or App Service, and provides an Azure AD identity that can be used to authenticate to any service supporting Azure AD authentication without storing any secrets. The identity is managed by Azure, eliminating the need for manual secret rotation, and it is automatically deleted when the resource is deleted, ensuring no orphaned secrets.
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 →
Same concept, more angles
1 more ways this is tested on AZ-104
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. Based on the exhibit, which identity should be enabled on the VM so the application can access Azure Blob Storage and the identity disappears when the VM is deleted?
medium- ✓ A.System-assigned managed identity
- B.User-assigned managed identity
- C.Storage account shared key
- D.SAS token stored in a startup script
Why A: A system-assigned managed identity is tied directly to the lifecycle of the Azure VM — when the VM is deleted, the identity is automatically removed. It can be granted access to Azure Blob Storage via Azure RBAC, allowing the application to authenticate without storing credentials. This matches the requirement for an identity that disappears with the VM.
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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