Look at the third decimal place (thousandths digit) to decide whether to round up or down.
• 1.2345 has digits: 1 (ones), 2 (tenths), 3 (hundredths), 4 (thousandths)
• To round to 2 decimal places, look at the thousandths digit: 4
• Since 4 < 5, we round down (keep the hundredths digit as is).
• 1.2345 rounded to 2 decimal places is 1.23
Final Answer: 1.23