Final answer:
In a data flow diagram, an external entity symbolizes both a source and a destination of data outside the system, such as customers or suppliers in a business scenario.
Step-by-step explanation:
In a data flow diagram (DFD), an external entity symbol represents both a source and a destination of data outside the system. This means that the external entity can either provide input to the system or receive output from it.
The symbol typically takes the form of a rectangle and is used to show the boundary between the system being analyzed and the outside world.
For example, if a DFD depicts a business's sales system, external entities might include customers, suppliers, and financial institutions which interact with the system by providing orders, supplying goods, or processing payments, respectively.
It represents a data input or output that comes from or goes to a system entity that is external to the system being analyzed. The external entity can be a person, another system, or an organization.
Therefore, the correct answar is 1) A source of data outside the system