Setup as new ipad?

We have an existing ipad, have used it for a year, but have never plugged it into a computer here. (it's a school ipad)

We just plugged it in for the first time and were given two options:

1. restore from backup
2. setup as new ipad

We definitely don't want 1. but are worried 2. will wipe the ipad.

Internet research says no, it will not wipe the ipad, it just means that iTunes will now understand and recognise (and be able to backup) this 'new' ipad.