Buddhism as much as I know is based upon transference of souls to other living entities
Birth or rebirth yes, but maybe no "soul".
See existing topics tagged rebirth and anatta for more on this topic (perhaps including this one).
I guess that part of the doctrine is that consciousness is conditioned by contact (e.g. conscious of a sight when seen), and so there's no kind of separate, independent soul; but once you get into trying to describe it, it's hard to stop -- it's a thicket of views:
This is how he attends inappropriately: 'Was I in the past? Was I not in the past? What was I in the past? How was I in the past? Having been what, what was I in the past? Shall I be in the future? Shall I not be in the future? What shall I be in the future? How shall I be in the future? Having been what, what shall I be in the future?' Or else he is inwardly perplexed about the immediate present: 'Am I? Am I not? What am I? How am I? Where has this being come from? Where is it bound?'
As he attends inappropriately in this way, one of six kinds of view arises in him: The view I have a self arises in him as true & established, or the view I have no self... or the view It is precisely by means of self that I perceive self... or the view It is precisely by means of self that I perceive not-self... or the view It is precisely by means of not-self that I perceive self arises in him as true & established, or else he has a view like this: This very self of mine — the knower that is sensitive here & there to the ripening of good & bad actions — is the self of mine that is constant, everlasting, eternal, not subject to change, and will stay just as it is for eternity. This is called a thicket of views, a wilderness of views, a contortion of views, a writhing of views, a fetter of views. Bound by a fetter of views, the uninstructed run-of-the-mill person is not freed from birth, aging, & death, from sorrow, lamentation, pain, distress, & despair. He is not freed, I tell you, from suffering & stress.
how does it deal with the possible existence of incorporeal entities or does it refute the idea?
I think that traditional Buddhist cosmology teaches that there is one category of formless being, i.e. "gods" -- see Formless Realm (Ārūpyadhātu), or Six classes of beings.
Some people say that these descriptions (of beings) represent states of mind.
Anyway, gods live in a formless realm (so, not the "physical world" you wee asking about).
Or there are "ghosts", which may be what you were asking about. Wikipedia says,
Pretas are invisible to the human eye, but some believe they can be discerned by humans in certain mental states.
I assume they have a body (i.e. a form) but whether it's a "physical" body I can't tell you.
It might be hard to distinguish between "Buddhism" and local folk beliefs or traditions -- whether ghosts are "real". I think that Buddhism doesn't say very much about them ... and says that they characterize excessive greed, deceit and so on ... that they arise from being insatiably greedy.