A physical inventory is defined as what process?

The correct definition of a physical inventory is identifying, counting, and evaluating all stock on hand. This process is essential in retail management to ensure that the amount of stock recorded in the inventory system matches the actual stock available. Conducting a physical inventory allows for accurate stock levels to be maintained, helps identify any discrepancies between recorded and actual stock, and supports inventory control processes. It also plays a crucial role in financial reporting, as the evaluation of stock on hand impacts the valuation of assets and overall financial health of the organization.

The process of identifying and counting all items in inventory helps in pinpointing lost, stolen, or damaged goods, while also facilitating informed decision-making regarding restocking, sales strategies, and overall management of the retail inventory.