Are cancelled and refunded orders included in my sales reports?

Yes. Sales by Date, Sales by Location, Coupon-wise and the reports overview add up every order placed in the date range, whatever its status. Cancelled, refunded and returned orders are counted along with the rest. Only test orders are left out.

So these reports show what was ordered in a period, not the money you kept.

To see refunds or cancellations on their own, go to Analytics → Reports. Type Refund in Search reports… and open Refund rate over time.