|A) Deducted from the balance sheet||B) Added to the bank balance|
|C) Deducted from the bank balance||D) Added to the balance sheet|
If an outstanding check of the previous month clears the bank (is paid by the bank) in the current month, you simply remove that check from the list of outstanding checks.
If an outstanding check of the previous month does not clear the bank in the current month, the check will remain on the list of outstanding checks until the month that it does clear the bank.
In the bank reconciliation process, the total amount of the outstanding checks is deducted from the balance appearing on the bank statement.