Understanding Magento order statuses

Note: Magento credit memos are always exported to Xero as Credit Notes.

Scenario 1: Order is placed and cancelled

Cancellation could happen automatically when for example a payment is taken via a third party website and the payment does not go through. Only in scenario 1 would an order be considered 'cancelled' in Magento.

Scenario 2: Order is refunded before it is shipped

Scenario 3: Order is shipped, then returned completely by customer for a refund

Scenario 4: Order is shipped, then returned partially by customer for a refund