Quick Answer
The one-time passcode (OTP) authentication method is the correct choice because it enables users to sign in using a temporary code sent via SMS to their mobile device, with no additional app or software installation required. This method works by having Microsoft Entra ID generate a unique, time-limited passcode and deliver it over the mobile network, making it ideal for guest users or bring-your-own-device scenarios where installing the Microsoft Authenticator app is not feasible. On the AZ-500 exam, this question tests your understanding of Microsoft Entra ID’s built-in authentication methods, often appearing in scenarios that contrast OTP with passwordless options like FIDO2 or the Authenticator app. A common trap is assuming the Microsoft Authenticator app is required for all code-based sign-ins, but OTP via SMS explicitly avoids that dependency. Memory tip: think “SMS-only, no app” to recall that OTP is the software-free, network-delivered solution for temporary access.
This AZ-500 practice question tests your understanding of secure identity and access. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. 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 organization uses Microsoft Entra ID for identity management. You need to ensure that users can sign in using a one-time passcode sent to their mobile device, without requiring any additional app or software installation. Which authentication method should you enable?
One-time passcode (OTP)
Built-in feature sending passcode via SMS or email.
Microsoft Authenticator app
Why wrong: Requires app installation.
FIDO2 security keys
Why wrong: Requires hardware keys.
Certificate-based authentication
Why wrong: Requires certificate deployment.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
One-time passcode (OTP)
Option A is correct because the one-time passcode (OTP) authentication method in Microsoft Entra ID allows users to sign in with a temporary code sent via SMS to their mobile device, requiring no additional app or software installation. This method is specifically designed for scenarios where users cannot or should not install the Microsoft Authenticator app, such as for guest users or in bring-your-own-device (BYOD) environments. The OTP is generated by Entra ID and delivered over the mobile network, satisfying the requirement of no extra software.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
One-time passcode (OTP)
Why this is correct
Built-in feature sending passcode via SMS or email.
Related concept
Read the scenario before looking for a memorised answer.
Microsoft Authenticator app
Why it's wrong here
Requires app installation.
FIDO2 security keys
Why it's wrong here
Requires hardware keys.
Certificate-based authentication
Why it's wrong here
Requires certificate deployment.
Common exam traps
The trap here is that candidates often confuse the 'one-time passcode' option with the Microsoft Authenticator app's push notification or time-based code feature, but the question explicitly requires no additional app installation, making the SMS-based OTP the only correct choice.
Detailed technical explanation
Under the hood, the OTP method for Microsoft Entra ID uses a time-based one-time password (TOTP) algorithm (RFC 6238) or a counter-based HMAC-based one-time password (HOTP) algorithm (RFC 4226), but for SMS delivery, Entra ID generates a random 6-8 digit code that is valid for a short window (typically 5-10 minutes). A subtle behavior is that the OTP method is only available for users who are not already registered for strong authentication methods like the Microsoft Authenticator app, and it is often used as a fallback for external or guest users in Azure AD B2B collaboration scenarios.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
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
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Secure identity and access — study guide chapter
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FAQ
Secure identity and access — This question tests Secure identity and access — Read the scenario before looking for a memorised answer..
The correct answer is: One-time passcode (OTP) — Option A is correct because the one-time passcode (OTP) authentication method in Microsoft Entra ID allows users to sign in with a temporary code sent via SMS to their mobile device, requiring no additional app or software installation. This method is specifically designed for scenarios where users cannot or should not install the Microsoft Authenticator app, such as for guest users or in bring-your-own-device (BYOD) environments. The OTP is generated by Entra ID and delivered over the mobile network, satisfying the requirement of no extra software.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 25, 2026
This AZ-500 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-500 exam.
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