- A
HTTP action with 'Active Directory OAuth' authentication type, referencing the client ID and client secret
This correctly implements the client credentials grant by providing the client ID and secret in the HTTP request.
- B
HTTP action with 'Managed Identity' authentication type
Why wrong: Managed identity authentication is used to authenticate to Azure services, not to external third-party APIs that require client credentials flow.
- C
Invoke an API with OAuth predefined connector
Why wrong: There is no generic 'Invoke an API with OAuth' connector; you must use the HTTP action with proper authentication.
- D
HTTP action with 'Basic' authentication and pass the secret as password
Why wrong: Basic authentication is not the same as OAuth 2.0 client credentials; it does not use Microsoft Entra ID tokens.
AZ-204 Practice Question: Connect to and consume Azure services and third-party services
This AZ-204 practice question tests your understanding of connect to and consume azure services and third-party services. 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.
You are building an Azure Logic App that calls an external REST API secured with the OAuth 2.0 client credentials flow. You have registered an app in Microsoft Entra ID with client ID and client secret stored in Azure Key Vault. The Logic App uses a system-assigned managed identity with Get permission on the secret. Which action should you use in the Logic App designer to authenticate to the API?
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
HTTP action with 'Active Directory OAuth' authentication type, referencing the client ID and client secret
Option A is correct because the OAuth 2.0 client credentials flow requires a client ID and client secret to obtain an access token from Microsoft Entra ID. The HTTP action's 'Active Directory OAuth' authentication type directly supports this flow, allowing you to reference the client ID and the client secret stored in Azure Key Vault. The Logic App's system-assigned managed identity has Get permission on the secret, enabling it to retrieve the secret at runtime without exposing it in the workflow definition.
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.
- ✓
HTTP action with 'Active Directory OAuth' authentication type, referencing the client ID and client secret
Why this is correct
This correctly implements the client credentials grant by providing the client ID and secret in the HTTP request.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
HTTP action with 'Managed Identity' authentication type
Why it's wrong here
Managed identity authentication is used to authenticate to Azure services, not to external third-party APIs that require client credentials flow.
- ✗
Invoke an API with OAuth predefined connector
Why it's wrong here
There is no generic 'Invoke an API with OAuth' connector; you must use the HTTP action with proper authentication.
- ✗
HTTP action with 'Basic' authentication and pass the secret as password
Why it's wrong here
Basic authentication is not the same as OAuth 2.0 client credentials; it does not use Microsoft Entra ID tokens.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates confuse 'Managed Identity' authentication (which works only for Azure resources like Azure SQL or Storage) with the need to authenticate to an external API using OAuth client credentials, leading them to incorrectly select Option B instead of the HTTP action with Active Directory OAuth.
Detailed technical explanation
How to think about this question
Under the hood, the 'Active Directory OAuth' authentication type in the HTTP action automatically constructs a token request to the Microsoft Entra ID token endpoint (https://login.microsoftonline.com/{tenantId}/oauth2/v2.0/token) using the client credentials grant (grant_type=client_credentials). The Logic App runtime retrieves the client secret from Key Vault via the managed identity's Get permission, ensuring the secret is never hardcoded. A real-world scenario is integrating with a third-party API like Salesforce or SAP that uses OAuth 2.0 client credentials, where the managed identity avoids secret rotation overhead.
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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Connect to and consume Azure services and third-party services — study guide chapter
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FAQ
Questions learners often ask
What does this AZ-204 question test?
Connect to and consume Azure services and third-party services — This question tests Connect to and consume Azure services and third-party services — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: HTTP action with 'Active Directory OAuth' authentication type, referencing the client ID and client secret — Option A is correct because the OAuth 2.0 client credentials flow requires a client ID and client secret to obtain an access token from Microsoft Entra ID. The HTTP action's 'Active Directory OAuth' authentication type directly supports this flow, allowing you to reference the client ID and the client secret stored in Azure Key Vault. The Logic App's system-assigned managed identity has Get permission on the secret, enabling it to retrieve the secret at runtime without exposing it in the workflow definition.
What should I do if I get this AZ-204 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-204 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-204 exam.
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