MS-102 Deploy and manage a Microsoft 365 tenant Practice Question
A company has purchased Microsoft 365 Business Premium and added a custom domain 'contoso.com' to the tenant. They want all new users to have email addresses like user@contoso.com instead of the default onmicrosoft.com domain. What should the administrator do in the Microsoft 365 admin center?
⚠ Common exam trap
Test-takers frequently confuse the default domain for new users with domain verification (TXT records) or mail routing (MX records), leading them to select options that are necessary for domain setup but not for controlling the email address assigned to new users.
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
✓
Set the custom domain as the default domain in the Domains settings.
Setting the custom domain as the default domain in the Domains settings ensures that any new user created in the Microsoft 365 admin center automatically receives an email address ending with @contoso.com instead of the default @<tenant>.onmicrosoft.com. This is the correct administrative action because the default domain setting controls the domain suffix applied to new user principal names (UPNs) and email addresses during user creation.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Set the custom domain as the default domain in the Domains settings.
Why this is correct
Setting the custom domain as the default domain in the Microsoft 365 Domains settings is the correct action because the default domain is directly assigned to newly created user mailboxes and email addresses. When you select a verified custom domain and mark it as default, all new users will automatically receive email addresses ending with that domain, such as user@yourdomain.com, instead of the initial onmicrosoft.com domain. This configuration is managed under Admin > Domains, where the 'Default' indicator appears on the domain that will be used for new user creation. Note that this does not change the tenant's primary domain, which is fixed for the initial Microsoft Entra ID organization.
- ✗
Add a DNS TXT record for the custom domain.
Why it's wrong here
Adding a DNS TXT record for the custom domain is part of the domain verification process to prove ownership to Microsoft 365. Although verification is a prerequisite for using the domain with services like Exchange Online, it does not control which domain is assigned to new user email addresses. Verification merely confirms that you control the DNS namespace; the default email domain is a separate configuration found in the Domains settings. Therefore, this action alone would not set the custom domain as the default for new users.
- ✗
Change the primary domain in the tenant's organization profile.
Why it's wrong here
Changing the primary domain in the tenant's organization profile only alters the initial Microsoft Entra ID domain, such as yourtenant.onmicrosoft.com, that identifies the entire organization. This setting does not determine the email domain for new users, because the primary domain is independent of the default user-email domain configuration. The default email domain is managed specifically under Domains settings, while the organization profile's primary domain is used for administrative URLs and Microsoft Entra ID-related services. Misinterpreting these two distinct settings is a common source of confusion.
- ✗
Update the MX record for the custom domain to point to Exchange Online.
Why it's wrong here
Updating the MX record for the custom domain to point to Exchange Online is necessary for incoming mail routing, ensuring that email sent to that domain is delivered to your Microsoft 365 mailboxes. However, the MX record has no effect on the email address format assigned to newly created users; it only governs how messages are delivered once an address already exists. New-user email addresses are drawn from the default domain setting in Microsoft 365, not from the MX record. Without changing the default domain, new users would still get the onmicrosoft.com suffix even if MX is correctly configured.
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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.
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.
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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.