Correct spelling, explanation: outstanding comes from a combination of words out and standing. In the past, it used to have the meaning of having an upright, erect position. Later, the meaning of outstanding evolved to conspicuous and unsettled. Today, outstanding is a widely used adjective.

Definition of outstanding:
1. adjective – something impressive and extremely good,
In the latest movie, this actress gave an outstanding performance and everybody expects her to be nominated for the Oscar awards.
2. adjective – not finished, paid, or solved yet,
We’ve done most of our homework, but two tasks still remain outstanding.

Expressions with outstanding:
Some commonly used expressions with outstanding are: outstanding example, outstanding achievement, and outstanding debt (the debt which hasn’t been paid yet).
Janet and her contribution to the project are outstanding examples of hard work and devotion.
His new song was in the top 10 of the charts for over three months, which was an outstanding achievement.
The outstanding debt of the company is over $2 million so I think we should stop cooperating with them.

Incorrect spelling, explanation: an adjective outstanding combines the words out and standing. Therefore, its spelling should not be troublesome. Nevertheless, when the word is pronounced, the first -t letter is often unheard and because of that many English users think that the correct spelling is oustanding, which is wrong.