Explanation:
Box 1: Adjust schedule
Select the termination type:
Adjust schedule - Cut off the billing periods for the line at the termination date, and change the status of the line to Last billing. If a deferral schedule exists for the line item, it's adjusted by reversing the amount that must no longer be recognized. If the billing start date is after the termination date, the remaining billing periods are removed.
Bill remaining - Add any remaining amount for the billing period to the termination period, and change the status of the line to Last billing. If a deferral schedule exists for the line item, the deferral end date is updated. If the billing start date is after the termination date, the total amount of all remaining billing periods is added to the billing period, and the remaining billing periods are removed.
Box 2: Issue credit
Select how the credit is applied when you terminate a billing schedule line:
Credit adjustment - Create a credit adjustment for a billing schedule when a line is terminated.
The credit adjustment appears in a future billing period for the billing schedule. The adjustment also automatically adjusts the invoice amount for the next billing period until the credit has finished being applied to the billing schedule.
*-> Issue credit - Create a credit note when a billing schedule or billing schedule line is terminated.
No credit - Don't create a credit adjustment or a credit note when a billing schedule or billing schedule line is terminated. This option is available only when you use a termination of the No adjustment type to terminate a billing schedule.
Reference:
https://learn.microsoft.com/en-us/dynamics365/finance/accounts-receivable/terminate-billing-schedule