What is a 'physical inventory'?

A 'physical inventory' refers to a physical count of every piece of merchandise in the store. This process involves counting the actual inventory on hand at a specific point in time, ensuring that records match the physical stock available. Performing a physical inventory is essential for maintaining accurate inventory records, helping retailers assess their stock levels, identify discrepancies, prevent theft or loss, and plan for future inventory needs.

In contrast to other choices, the options do not accurately define a physical inventory. A record of employee sales performance focuses on individual employee productivity rather than stock levels. A system for tracking customer purchases pertains to sales data and customer behavior rather than inventory management. An estimate of future sales deals with forecasting revenue and demand and does not involve the physical count of items in the store. This differentiation helps clarify why the correct answer is specifically about the tangible assessment of existing merchandise.