MS-102 Deploy and manage a Microsoft 365 tenant Practice Question
After adding a custom domain name to a Microsoft 365 tenant, what is the first step the administrator must complete before users can sign in using the custom domain?
⚠ Common exam trap
Many exam-takers confuse the order of operations, thinking they can add the domain to Exchange Online or create users first, but Microsoft 365 strictly enforces domain verification as the prerequisite for all subsequent domain-related configurations.
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
✓
Verify domain ownership by adding a DNS TXT record
Before a custom domain can be used for user sign-ins or email routing in Microsoft 365, the administrator must prove ownership of the domain. This is done by adding a specific DNS TXT record provided by the Microsoft 365 domain setup wizard. Until the TXT record is verified, the domain remains unverified and cannot be used for any Microsoft 365 services.
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 as an accepted domain in Exchange Online
Why it's wrong here
To use a custom domain for Exchange Online, you must first add it to the tenant and verify ownership; only after verification outbound and inbound email will route through it. In the Exchange admin center, accepted domains are configured as authoritative but the domain will not be eligible until its verification status is 'Verified'. Attempting to add an unverified domain as an accepted domain would result in a configuration error or mail flow failure.
- ✗
Set the custom domain as the default domain for new users
Why it's wrong here
Changing the default domain used for new users is an administrative action that depends on the domain already being verified. The Microsoft 365 admin center lists unverified domains with a 'Not verified' status, and the option to set it as default is disabled until you complete the DNS TXT verification. If you attempted this before verification, the system would reject the change because Azure AD associates verified domains with actual ownership.
- ✓
Verify domain ownership by adding a DNS TXT record
Why this is correct
The first mandatory step after adding a custom domain is to prove you control it by publishing a DNS TXT record containing the unique token Microsoft provides in the domain setup wizard. Microsoft validates the TXT record at the domain's DNS provider, and until this succeeds, the domain shows 'Not verified' in the Microsoft 365 admin center. Only after this verification can you proceed with configuring the domain for email or user accounts.
- ✗
Create user accounts with usernames ending with the custom domain
Why it's wrong here
You cannot create a new user account with a UPN suffix based on the custom domain until that domain has been verified in the tenant. During user creation, Azure AD only offers verified domains in the dropdown list for the user principal name. If you type an unverified domain manually, the operation fails with an error indicating the domain is not currently available or verified.
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Microsoft 365 Tenant Setup
Key term
Microsoft 365
Microsoft 365 is a subscription-based cloud service from Microsoft that combines productivity tools like Office apps with security, device management, and online storage.
Key term
Custom domain
A custom domain is a personalized internet address (like contoso.com) that you can use with cloud services instead of the default domain provided by the service provider.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This MS-102 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 MS-102 exam.