Personal Accounting

If you have a checking account, naturally you balance it periodically to touch on any differences between what's in your statement and what you wrote down for checks and deposits. Many people do it once a month when their statement is mailed to them, but with the advent of online banking, you can do it daily if you're the sort whose banking tends to get away from them.

You balance your checkbook to note any charges in your account that you haven't recorded inside your checkbook. Some of these can include ATM fees, overdraft fees, special transaction fees or low balance fees, if you're required to keep a minimum balance in your account. You will also balance your checkbook to record any credits that you haven't noted previously. They might include automatic deposits, or refunds or other electronic deposits. Your checking account might be an interest-bearing account and you wish to record any interest that it's earned.

You also have to discover if you've made any errors in your recordkeeping or if the bank has made any errors.

Another form of accounting that we all dread is the filing of annual federal income tax returns. Many people use a CPA to do their returns; others do it themselves. Most forms include the following items:

Income - money you've earned from working or owning assets, unless certain exemptions from income tax.

Personal exemptions - this is a suggested of income that is excused from tax.

Standard deduction - some personal expenditures or business expenses might be deducted from your income to reduce the taxable quantity of income. These expenses include items such as interest paid on your private home mortgage, charitable contributions and property.

Taxable income - This is the balance of income that's subject to taxes after personal exemptions and deductions are factored in.