1. When a guest returns a product purchased through the POS, does that product automatically go back into the on-hand inventory?

    No. The returned product does not get restocked automatically unless the org level setting Allow to restock returned products is enabled. And, if this setting is enabled, the product is restocked to the floor. 

For businesses with no separate store and floor, if the setting is enabled, the product gets restocked and the On-Hand quantity is updated automatically.

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