Agency (also referred to as free agency or moral agency), in Latter-day Saint theology, is "the privilege of choice which was introduced by God the Eternal Father to all of his spirit children in the premortal state". Mortal life is viewed as a test of faith, where our choices are central to the plan of salvation in Mormon teaching. "It was essential for their eternal progression that they be subjected to the influences of both good and evil". Mormons believe that Lucifer presented an alternative plan, which resulted in a war in heaven, with Lucifer being cast out of heaven and becoming Satan.
Mormons believe that all individuals have the ability to differentiate between good and evil and that Satan and his followers are not able to tempt people beyond the point where they can resist. This implies that mortals can be held accountable for their actions; mortals will be judged by God based on a combination of one's faith and works (with salvation coming only through the power, mercy, and grace of Jesus Christ).
A major difference between the beliefs of Latter-day Saints and many other Christians involves the belief of a life before mortality, referred to as the pre-earth life, pre-mortal life, or pre-existence. Latter-day Saints believe that before the earth was created, all mankind lived as spirit children of God. Here, God nurtured, taught and provided means for their development. This preparation would allow them to later become the men and women of Earth, to be further educated and tested in the schoolhouse of mortality in order to return to God's presence and become like him. Thus, the pre-existent life is believed to have been a period of unknown length of progression, and schooling. Mormons believe that there came a time when we could not progress further without being born into a body and experiencing earthly life.
According to Mormon beliefs, God proposed a plan whereby further progression could take place, a plan of salvation. Because agency would allow all people to fall in sin, a savior was necessary to atone for the sins of each person so that they could return to live with their Father in Heaven. Jesus volunteered to follow the plan as outlined, which preserved agency, accountability for action, and the necessary result that some of Heavenly Father's children would never to return to Heavenly Father as a consequence of sin. The second volunteer, Lucifer, attempted to amend the plan by proposing that all mankind would return to Heavenly Father despite their sins—essentially defeating agency and the divine principle of accountability for action. God the Father chose the plan that he proposed with Jesus as the Savior. Lucifer and his followers rebelled against this plan and were eventually cast out of heaven. Lucifer became Satan.