You can supply the correct password, skip decryption/extraction of the file, or cancel the current operation completely.
To supply the correct password
To skip the current file
To cancel the operation
In the case of extract operations (including Extract, CheckOut, Install, etc.), any files already processed will remain extracted, but no additional files will be extracted.
In the case of Encrypt, the Zip file reverts to its previous state, and files that were previously unencrypted will remain unencrypted.