Accounting & Personal Finance Basics

If you have a checking account, you obviously balance it periodically to account for the difference between what’s on your statement and what you write for checks and deposits. Many people do this once a month when they receive their statement in the mail, but with the advent of online banking, you can do it every day if you are the type of bank that tends to avoid it.

Balance your checkbook to record any expenses in your checking account that you haven’t recorded in your checkbook. Some of these may include ATM fees, overdraft fees, special transaction fees, or low balance fees, if you are required to maintain a minimum balance in your account. You also balance your checkbook to record credits that you haven’t previously recorded. They can include automatic deposits, refunds, or other electronic deposits. Your checking account may be an interest-bearing account and you want to record all accrued interest.

You also need to find out if you made a mistake in registration or if the bank made a mistake.

Another form of accounting that we all dread is filing an annual federal tax return. Many people use CPA to make a profit; others do it themselves. Most modules include the following elements:

Income – all the money you earn from working or owning assets, unless there is a special exemption from income tax.

Personal Exemption – This is a certain amount of income that is exempt from taxes.

Standard Deductions: Some personal or business expenses may be deducted from income to reduce the amount of taxable income. These expenses include items such as interest paid on home loans, charitable contributions, and property taxes.

Taxable Income – This is the balance of income that is taxed after personal exclusions and deductions have been considered.

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