The answer is to add the domain and verify ownership by creating a TXT record. This is the mandatory first step because Microsoft 365 requires proof that you control the domain before any services—such as email routing or SharePoint Online—can be provisioned; the TXT record acts as a cryptographic handshake between your DNS host and Microsoft’s directory. On the MS-102 exam, this question tests your understanding of the domain onboarding workflow, and a common trap is assuming you can skip verification or start configuring services like Exchange immediately. Remember that verification via TXT is always the gatekeeper—no TXT, no services. A useful memory tip is “TXT first, services next,” reinforcing that the DNS text record must be added and confirmed before any other domain setup proceeds.
MS-102 Deploy and manage a Microsoft 365 tenant Practice Question
This MS-102 practice question tests your understanding of deploy and manage a microsoft 365 tenant. This is a configuration task: choose the command set that satisfies every stated requirement. Small differences — like 'secret' vs 'password' or 'transport input ssh' vs 'all' — change whether the answer is correct. 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 administrator wants to add a custom domain 'contoso.com' to a new Microsoft 365 tenant. The domain is already registered and available. What is the first step the administrator should perform in the Microsoft 365 admin center?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "first"
Why it matters: Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Add the domain and verify ownership by creating a TXT record
The first step when adding a custom domain to a Microsoft 365 tenant is to add the domain in the admin center and then verify ownership by creating a TXT record in the domain's DNS zone. This proves you control the domain before any services (like email or SharePoint) can be configured. Without verification, Microsoft 365 will not allow further domain-related setup.
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.
✓
Add the domain and verify ownership by creating a TXT record
Why this is correct
Correct. Domain verification is required before using the domain for services.
Clue confirmation
The clue word "first" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
✗
Create user accounts with the new domain
Why it's wrong here
User accounts cannot be created with the domain until it is verified.
✗
Configure email routing with MX records
Why it's wrong here
MX records are configured after domain verification to route email to Exchange Online.
✗
Set up SharePoint Online with the new domain
Why it's wrong here
SharePoint Online uses the tenant domain; custom domain setup comes after verification.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates may think MX record configuration is the first step because they associate domains primarily with email, but Microsoft 365 requires ownership verification via TXT record before any service-specific DNS changes are allowed.
Detailed technical explanation
How to think about this question
Domain verification in Microsoft 365 uses a DNS TXT record with a unique verification value generated by the tenant. The system periodically checks for this record; once found, the domain status changes from 'Unverified' to 'Verified'. This process is defined in RFC 1035 for TXT records and is a prerequisite for enabling any Microsoft 365 service on the domain, including Exchange Online, SharePoint Online, and Teams.
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 cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this MS-102 question in full detail.
Deploy and manage a Microsoft 365 tenant — This question tests Deploy and manage a Microsoft 365 tenant — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Add the domain and verify ownership by creating a TXT record — The first step when adding a custom domain to a Microsoft 365 tenant is to add the domain in the admin center and then verify ownership by creating a TXT record in the domain's DNS zone. This proves you control the domain before any services (like email or SharePoint) can be configured. Without verification, Microsoft 365 will not allow further domain-related setup.
What should I do if I get this MS-102 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: "first". Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
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 →
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. An administrator wants to add a second custom domain, 'contoso-europe.com', to their existing Microsoft 365 tenant. The domain 'contoso.com' is already verified. What is the first step the administrator should take?
easy
✓ A.Add the domain in the Microsoft 365 admin center
B.Create a DNS TXT verification record
C.Update the UPN suffixes for users
D.Create a new Microsoft 365 tenant
Why A: To add a new domain, the administrator must first add it in the Microsoft 365 admin center under Setup > Domains. After adding it, verification steps (like adding a TXT record) are required. Updating UPN suffixes is done after verification. Creating a new tenant is unnecessary.
Variation 2. An administrator needs to add a custom domain 'contoso.org' to their Microsoft 365 tenant. They have already purchased the domain and have access to the DNS registrar. What is the first step the administrator should perform in the Microsoft 365 admin center?
easy
A.Add a TXT record in the public DNS zone
✓ B.Add the domain in the Microsoft 365 admin center
C.Configure email routing (MX record)
D.Create user accounts with the new domain
Why B: The first step to add a custom domain to a Microsoft 365 tenant is to initiate the domain addition process in the Microsoft 365 admin center. This triggers Microsoft to generate the unique verification TXT record that must be published in the public DNS zone. Without first adding the domain in the admin center, the administrator would not know the specific verification string required for the TXT record.
Variation 3. An administrator is onboarding a new custom domain for email in a Microsoft 365 tenant. Which step should be performed first?
easy
✓ A.Add the domain in the Microsoft 365 admin center
B.Verify domain ownership by adding a TXT record
C.Configure DNS records for Microsoft services
D.Set the domain as the primary email domain
Why A: Before you can use a custom domain for email or any other service in Microsoft 365, you must first add the domain to the tenant in the Microsoft 365 admin center. This creates the domain object in Azure Active Directory and initiates the verification process. Only after the domain is added can you proceed to verify ownership and configure DNS records.
Variation 4. An administrator wants to add a custom domain 'fabrikam.com' to a new Microsoft 365 tenant. What is the first step the administrator should perform?
easy
✓ A.Add the domain in the Microsoft 365 admin center.
B.Create an SPF record for the domain.
C.Create a MX record pointing to Exchange Online.
D.Assign Microsoft 365 licenses to users with @fabrikam.com addresses.
Why A: The first step to add a custom domain to a Microsoft 365 tenant is to add the domain in the Microsoft 365 admin center. This initiates the domain verification process, where Microsoft provides a TXT record or MX record that the administrator must add to the domain's DNS hosting provider to prove ownership. Without completing this verification step, no other domain-related configurations (such as SPF, MX records, or user licensing) can proceed.
Last reviewed: Jun 11, 2026
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