Final answer:
A check register is used to record purchases and withdrawals from a checking account and is more accurate than bank statements because it can be updated in real-time. Balancing your checkbook is essential for managing your finances and avoiding overdraft fees.
Step-by-step explanation:
The tool used to record all purchases and withdrawals from your checking account is known as a check register or transaction register. This is a booklet that comes with your checkbook or an electronic ledger that you can maintain yourself. It's crucial for balancing your checkbook, which ensures you have an accurate representation of your funds and helps you manage your money effectively and avoid overdraft fees.
Banks facilitate a wide range of financial transactions, but the bank statements they provide may not be as current as your own check register. This is because bank statements are typically issued at the end of the statement period and may not include recent transactions or pending checks. Therefore, regularly updating your check register provides a more immediate and accurate account balance than waiting for bank statements.
Without a bank account, individuals would have to carry large sums of cash, which can be risky and inconvenient. Checking accounts and savings accounts offer not just a secure place to hold funds but also various ways to access your money, such as through direct withdrawals, writing checks, or using a debit card. Balancing your checkbook is an important aspect of financial planning, helping you keep tabs on your cash flow and avoid unnecessary fees.