Definition:
A canceled check is a check that has been paid by the bank and marked “canceled” or “paid” by the bank. It serves as proof of payment and is typically returned to the payee after the transaction is completed.
Key points about canceled checks:
- Paid check: A canceled check is a check that has been paid by the bank.
- Proof of payment: It serves as proof of payment for the payee.
- Bank records: Canceled checks are retained by banks as part of their records.
- Reconciliation: Canceled checks are used in bank reconciliation to verify the accuracy of bank accounts.
Why are canceled checks important?
- Proof of payment: Canceled checks are essential for documenting payments and resolving disputes.
- Tax records: They can be used as tax records to support deductions or income.
- Bank reconciliation: Canceled checks are used in bank reconciliation to verify the accuracy of bank accounts.
In essence, a canceled check is a check that has been paid by the bank and serves as proof of payment.
