I’ve said this before: if I were teaching at an elementary level, I would forbid the use of the word “cancel” in my classes. In dealing with fractions, the appropriate rule is that you may multiply (or divide) both top and bottom by the same nonzero quantity without changing the value of the fraction. And to a certain degree, this is the Cardinal Rule of Fractions. It’s what you do when you reduce, and it’s what you do when you try to add two fractions with different bottoms (“denominators”).
So, for instance, $x^3/2x=x^2/2$, by dividing top and bottom by $x$, but
in the instant case, you have not divided top and bottom by anything to go from $x^3+1$ to $x+1$ upstairs, and (presumably) $x+1$ to $1$ downstairs.
Banish cancel from your vocabulary!