AAP Returns, Reversals, and Adjustments 2 — Questions and Answers
Question 1: A reversing entry must be transmitted within how many banking days after the original entry's settlement date?
- 5 banking days (Correct answer)
- 2 banking days
- 60 calendar days
- Same banking day
Correct answer: 5 banking days
Under NACHA rules, a reversing entry must be sent within 5 banking days of the original entry's settlement date.
Question 2: Return code R07 indicates:
- Authorization revoked by the Receiver (Correct answer)
- Account has been closed
- Payment stopped by the Receiver
- Insufficient funds in the account
Correct answer: Authorization revoked by the Receiver
R07 (Authorization Revoked by Consumer) is used when a consumer has revoked a previously granted authorization for recurring debits.
Question 3: NOC change code C01 indicates:
- Incorrect DFI account number (Correct answer)
- Incorrect routing/transit number
- Incorrect individual name
- Incorrect transaction code
Correct answer: Incorrect DFI account number
C01 is the change code used in a Notification of Change to indicate that the DFI account number in the entry is incorrect and needs to be updated.
Question 4: When an ODFI receives a return entry from an ACH Operator, it must pass the return to the Originator within:
- 2 banking days of receiving the return (Correct answer)
- Same banking day of receipt
- 5 calendar days of receipt
- 60 banking days of receipt
Correct answer: 2 banking days of receiving the return
The ODFI must pass return entries to the Originator within 2 banking days of receiving them from the ACH Operator.
Question 5: A dishonored return is when:
- An ODFI returns a return entry because it does not comply with NACHA rules (Correct answer)
- A Receiver formally rejects a credit entry
- NACHA rejects a batch for format errors
- An ACH Operator cancels a batch before settlement
Correct answer: An ODFI returns a return entry because it does not comply with NACHA rules
A dishonored return is transmitted by an ODFI when it receives a return entry that it believes was improper or untimely under NACHA Operating Rules.
Question 6: Return code R29 indicates:
- Corporate customer advises the entry is not authorized (for CCD, CTX, or other corporate entries) (Correct answer)
- Insufficient funds in a corporate account
- Corporate account has been closed
- Invalid company identification number
Correct answer: Corporate customer advises the entry is not authorized (for CCD, CTX, or other corporate entries)
R29 (Corporate Customer Advises Not Authorized) is the business equivalent of R10, used when a corporate Receiver states a debit entry was not authorized.
AAP Returns, Reversals, and Adjustments 2
A reversing entry must be transmitted within how many banking days after the original entry's settlement date?