Which two types of ACH transactions are commonly recognized?

Which two types of ACH transactions are commonly recognized?

• A. Checks and Transfers
• B. Credits and Debits
• C. Purchases and Deposits
• D. Withdrawals and Payments

Answer: (B)

The correct answer identifies two fundamental types of Automated Clearing House (ACH) transactions: credits and debits. In the ACH network, credits refer to transactions where money is being added to an account, such as direct deposits or electronic payments. Debits, on the other hand, involve withdrawing money from an account, such as automatic bill payments or scheduled withdrawals. Understanding these two types is essential for effective management of electronic funds transfers, especially in accounts receivable where organizations commonly use ACH for receiving payments or making disbursements. Recognizing the distinct roles of credits and debits in the ACH framework helps in identifying transaction types, ensuring proper accounting, and facilitating security measures that pertain to electronic transactions. This knowledge is foundational for anyone working in finance, accounting, or accounts receivable.

The correct answer identifies two fundamental types of Automated Clearing House (ACH) transactions: credits and debits. In the ACH network, credits refer to transactions where money is being added to an account, such as direct deposits or electronic payments. Debits, on the other hand, involve withdrawing money from an account, such as automatic bill payments or scheduled withdrawals.

Understanding these two types is essential for effective management of electronic funds transfers, especially in accounts receivable where organizations commonly use ACH for receiving payments or making disbursements. Recognizing the distinct roles of credits and debits in the ACH framework helps in identifying transaction types, ensuring proper accounting, and facilitating security measures that pertain to electronic transactions. This knowledge is foundational for anyone working in finance, accounting, or accounts receivable.