State BPA Fundamental Accounting Practice Exam

What is the term for a check that has been written but not yet cleared the bank account?

1. Cancelled Check

2. Outstanding Check

3. Void Check

4. Cleared Check

The correct answer is: Outstanding Check

The term for a check that has been written but not yet cleared the bank account is "Outstanding Check." When a check is issued, it represents a payment ordered by the account holder. Until the recipient deposits the check and it goes through the bank system for processing, the funds have not yet been deducted from the account holder’s bank balance. As such, the check remains outstanding until it is presented for payment, at which point it will either clear or bounce depending on the availability of funds in the account. Cancelled checks, on the other hand, are those that have been processed and paid by the bank, while void checks are checks that have been written but rendered invalid and are not intended for payment. Cleared checks are those that have already been processed and funds have been withdrawn from the account. Thus, "Outstanding Check" accurately describes the status of a check that has yet to be cashed or deposited.