Question

How often should you reconcile your checking account?

1) quarterly
2) daily
3) monthly
4) annually
5) never

Answer 1

You should reconcile your checking account monthly to keep track of finances and prevent overdraft fees. Money in checking accounts and physical currency are in M1, while funds in money market accounts are in M2, and a line of credit is neither.

Step-by-step explanation:

The best practice for reconciling your checking account is to do it monthly. This helps you effectively manage your money, monitor your cash flow, and prevent overdraft fees. It's easier to reconcile regularly than to catch up after falling behind.

M1 and M2 Money Supply Categories

1. Your $5,000 line of credit on your Bank of America card is neither in M1 nor M2 because it represents potential borrowing, not actual money.
2. $50 dollars' worth of traveler's checks you have not used yet are part of M1, as they are traveler's checks.
3. $1 in quarters in your pocket is part of M1 because it is physical currency.
4. $1200 in your checking account is part of M1, which includes checking deposits.
5. $2000 in a money market account is part of M2, which encompasses all of M1 plus certain savings deposits like money market accounts.