Is it know when or what events lead to Shepard earning the N7 designation? Are we to assume that it was awarded for which ever event the player chooses as part of their service history or did BioWare choose not to answer this question at all? For being the game's recognizable icon, there seems to be remarkably little information on the N-school or on missions which earn candidates the distinguished designation.
Mass-effect – When and how did Commander Shepard become N7
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Best Answer
Most of the canonical information we have about the N-school and the N7 rank in particular comes from a BioWare ANN Blog Post. There's a lot of lore there, but the key points are:
By the time Shepard is XO of the Normandy, they are already a N7. Thus, the events that lead to that designation must have occurred before the first game.
Suspecting something chosen as part of the "pre service history" part of character creation seems logical, but looking at the codex entries for the various combinations seems to indicate that most of these events happened early in Shepard's career. Thus, I find it more likely that those events were the reason Shepard was recruited to the N-school, rather than the live combat exercise where (s)he received their N7 rating.
However, BioWare has never gone on record about this, so anything is technically possible.