- 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.
Quick Answer
The answer is to use resource groups for app team isolation and tags for cost reporting. Resource groups act as logical containers that allow you to assign Azure RBAC permissions at the group scope, so each app team can manage only its own resources without accessing others. Tags, such as an application or cost-center identifier, enable Azure Cost Management to filter and aggregate costs by that tag, giving finance the per-application report they need. On the AZ-104 exam, this tests your understanding of the distinct roles of resource groups (management boundaries) versus tags (metadata for filtering and reporting). A common trap is assuming a resource group alone can handle cost reporting—it cannot, because a resource group is not a cost dimension in Azure Cost Management. Memory tip: think of resource groups as the "fence" for team isolation and tags as the "label" for the finance report.
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.
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue:
"best"Why it matters: Signals that multiple options may be partially correct. Choose the option that most directly solves the exact problem described, not the one that sounds most complete.
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.
Clue confirmation
The clue word "best" in the question point toward this answer.
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.
Clue confirmation
The clue word "best" in the question point toward this answer.
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.
- ✗
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.
- ✗
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.
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.
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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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.
Are there clue words in this question I should notice?
Yes — watch for: "best". Signals that multiple options may be partially correct. Choose the option that most directly solves the exact problem described, not the one that sounds most complete.
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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