State Transitions in CRM- State transition Rules for Status Reason field on Incident entity

Hi All,

I make use of state transition rules on field Status Reason in Incident entity. 

While setting the transition rules I get such alert box stating "You haven't defined how a incident will transition from an active state to a resolved or cancelled state. If you don't define the transition, incident records can't be resolved or cancelled."

So the question is where can I find the setting to set this transition from Active state to resolved of cancelled state?

Thank you in advance. :)