Again, there's a problem with terminology. I think you meant that you have quilted backing, batting, and top together and want to know whether to cut even with the top or outside the top. I have done both ways. If it's a big quilt and I want a 1/2" binding, then I cut the backing and batting a scant 1/4" outside the quilt top, and sew my 2.5" folded binding so that the edge is even with the quilt top and the stitches are a scant 1/4" inside the quilt top and binding. Then when I fold the binding to the back side of the quilt there is just enough to barely cover the stitch lines. The two "scants" make up for the width of the batting that the folded binding has to cover. I could accomplish the same thing by using a 3" binding and placing it even with the cut edge, but then I'd have more bulk inside the binding and that's not my goal.