Accredited ACH Professional (AAP) Practice Exam

Which type of checks are processed in the collection cycle?

1. On-us checks and Transit checks

2. Transit checks and Business checks

3. On-us checks and Money orders

4. Cashier's checks and Personal checks

The correct answer is: On-us checks and Transit checks

The correct answer is that on-us checks and transit checks are processed in the collection cycle. This is because the collection cycle involves the process through which financial institutions gather funds from checks deposited by their customers. On-us checks are checks that are written on an account held at the same institution where they are deposited. Since they don’t require any interbank processing, these checks can be settled quickly within the same institution. Transit checks, on the other hand, are checks that are drawn on accounts held at different financial institutions. During the collection cycle, these checks require processing through the appropriate clearing channels to ensure that the funds are transferred from one institution to another. Together, on-us checks and transit checks represent key components of the check collection process. They illustrate the flow of funds and the necessity for institutions to manage these different types of transactions effectively.