Definition of Outstanding Checks
Outstanding checks are checks written by a company, but the checks have not cleared the bank account.
Example of an Outstanding Check in the Bank Reconciliation
In a bank reconciliation the outstanding checks are a deduction from the bank balance (or balance per the bank statement).
If an outstanding check from the previous month did not clear the bank account in the current month, the check will remain on the list of outstanding checks. As a result, the bank reconciliation for the current month will again show the outstanding check amount as a subtraction from the bank statement balance.
If an outstanding check of the previous month clears the bank, it means the bank paid the check and the check will appear as a deduction on the statement. Hence, the check is removed from the list of outstanding checks.