Why are checks cancelled when approved?

A friend of mine just asked if I had paid him back for some money he lent me. I told him the check was cancelled on the 9th. Concerned, he asked, "why'd you cancel the check?"

I replied, "I didn't stop payment on it. It was deposited and so the bank cancelled it."

This is obviously a source of confusion so I looked around online but didn't find anything satisfactory. What is the etymology of "cancelled check?"

Solution 1:

For fear that my question was going to be closed, I called a friend of mine who is a CPA. It turns out the term "cancelled" in accounting is not the same as the term "cancelled" to lay folks.

In accounting, cancelled means to eliminate a debit or credit by making an offsetting entry to the account. When I write a check, the bank incurs a liability. When the check clears at the depositor's bank or I call and I stop payment on my check, the credit on the liability is "cancelled" by a debit on the liability.

That's why a check that has been processed is a "cancelled" check. Incidentally, that's also why credit cards and debit cards are named counterintuitively (because the terminology is based on the banks perspective, not yours).

Solution 2:

It is cancelled in the sense that it may no longer be redeemed for its face value.