Which of the following items is deducted from the company's cash balance during reconciliation?

During bank reconciliation, certain items are adjusted to accurately reflect the company's cash balance. Bank service fees are one of the deductions made from the cash balance because they represent charges that the bank has deducted from the company’s account but may not have been recorded in the company’s books yet.

The cash balance reported by the bank could be lower than the company’s records due to these fees, which have been processed by the bank. Therefore, it is crucial to account for them in order to align the company's records with the bank statement.

In contrast, deposits in transit and outstanding checks do not reduce the cash balance. Deposits in transit are amounts that have been recorded in the company’s books but have not yet been reflected in the bank statement, and outstanding checks are checks that the company has issued but that the bank has not yet cleared. Both items actually serve to reconcile the bank's cash balance to the company's records, but they do not represent direct deductions from the company's cash balance.