Future Business Leaders of America (FBLA) Accounting Practice Test

What is a canceled check?

1. A check that has been deposited but not processed

2. A check marked paid and returned to the issuer

3. A check that cannot be cashed

4. A check in the process of being voided

The correct answer is: A check marked paid and returned to the issuer

A canceled check refers to a check that has been marked as paid and returned to the issuer by the bank. This means that the funds have already been withdrawn from the issuer's account and the check is no longer valid for cashing. It serves as proof of payment, and the transaction is officially recorded. Canceled checks are typically used for record-keeping purposes and can be important for both the payer and the payee to track the history of transactions accurately. Other options describe different scenarios related to checks but do not accurately define a canceled check. For instance, a check that has been deposited but not processed refers to a check that is still pending confirmation from the bank, while a check that cannot be cashed suggests that something has made it invalid, which does not capture the essence of a canceled check. Lastly, a check in the process of being voided indicates that the check is not finalized and should not be considered as a completed transaction yet. Understanding the definition of a canceled check is critical for effective financial record-keeping and auditing processes.