If I was to convert PSD to HTML, what should my document size be in Photoshop when creating a typical web page?
I have not tried this out yet but what I am thinking in my head is that I will be scaling my images depending on my document size and if my document size is too big or too small, it wont reflect what I am trying to achieve in my web page.
How do I design a typical web page in photoshop so that the layout appears identical to that of the web page in terms of size?
This is based on a centred webpage and not a full width webpage.
That depends on your target monitor size. You should look for the lower common denominator. If you think you will get a lot of small screens, then 955px is a good size to start with (target size would be 1024), but if you think your site will be viewed in larger displays, you can go as high as 1140px (targeting 1280 screens).
It really depends on who you plan to target. There is no one answer for this.
Also, keep in mind, that with the advent of responsive design, then you have to design different layouts, for different resolutions.