What happens if I select the Physical Material Return Required check box?

Transactions are created for the physical return of the material, and shipment lines and reservations are created. You can pick, pack, and ship physical material returns.

If you don't select this check box, the return is considered an accounting only return. Shipment lines and reservations aren't created, the transfer order is set to a status of closed automatically, and the shipped or received quantities aren't updated.