Accredited ACH Professional (AAP) Practice Exam

Which of the following is a valid reason for initiating reversing entries?

1. A payment over $1,000

2. A duplicate entry previously initiated

3. An entry not intended for ACH processing

4. A payment from an unknown source

The correct answer is: A duplicate entry previously initiated

Initiating reversing entries is a crucial part of the ACH process, particularly when addressing issues that arise from prior transactions. The valid reason for initiating reversing entries in this case pertains to the occurrence of a duplicate entry that was previously initiated. When a duplicate entry is processed, it can lead to multiple payments being taken from a customer’s account in error. This not only affects the customer’s funds but can also harm the reputation of the financial institution or payment provider involved. By initiating a reversing entry, the original transaction is effectively nullified, ensuring that the customer’s account reflects the correct balance and that the error is corrected efficiently. The other scenarios presented do not typically warrant reversing entries. A payment over $1,000 does not inherently justify a reversal; what matters is whether the payment was erroneous or not. Similarly, an entry not intended for ACH processing may need to be handled differently, perhaps requiring a different type of correction rather than a reversal. Lastly, a payment from an unknown source might require investigation rather than a simple reversal, as it may not be clear that a reversal is necessary until the context of the payment is understood. Thus, addressing duplicates specifically with a reversing entry is a standard and necessary practice in ACH transactions.