In accounting, dealing with nickels and dimes can complicate matters. Most of the time, it's necessary to track every cent, especially if you owe change to a customer or you're the customer, waiting for your own change. But if you're setting a budget or paying back a friend, rounding to the nearest dollar can keep things simple. If you're doing your taxes, you'll definitely need to practice your rounding skills, since the IRS prefers having tax returns submitted that way. Although rounding to the nearest dollar might seem straightforward enough, there are some techniques you can use to improve your currency-rounding skills to make your totals as close to exact as possible.
When rounding a number with a decimal point, the number to the right of the decimal determines whether you round up or down. To round to the nearest dollar, you would look at the number to the right of the decimal and determine whether that number is less than 5. If the number were 0–4, you would round down. Any number greater than 4 would mean you round up.
Putting this into practice, a dollar amount of $4.23 would round down to $4.00, since the "2" after the decimal point is less than 4. If that amount were, instead, $4.53, you would round up to $5.00, since the number to the right of the decimal is greater than 4.
When rounding numbers, it's important to still get as close as you can to the accurate amount. If you're rounding to the next dollar on your taxes, you shouldn't round up to the next hundreds of dollars, for instance. Simply round the numbers to the right of the decimal to arrive at ".00." This will help you remain within the general range of the correct amount without dealing with the minutiae of change.
To ensure your numbers are as accurate as possible, add numbers before rounding the total to the nearest dollar amount. For example, if you're calculating your budget for office supplies in a given month, you would total all of the items individually, dollars and cents, and round the total amount to the nearest dollar. If you're calculating your office supply budget for the whole year, though, you would want to add your supply expenditure for every month of the year, then round the yearly amount to the nearest dollar.
In some instances, rounding makes more sense. However, if you need to be exact, then include dollars and cents in your calculations. Choose the accounting method that works for your particular needs and make sure you round overall totals to get the most accurate results possible.