Final answer:
A physical inventory is conducted to verify actual on-hand inventory levels, ensuring that they match the inventory records and to correct any discrepancies.
Step-by-step explanation:
The actual hand-on inventory level in storage is verified by what is known as a physical inventory. This process involves counting all the physical stock to ensure that the inventory records match the actual quantity of goods on hand. A physical inventory can be carried out periodically, such as at the end of a fiscal year, or continuously, known as cycle counting. In either case, the purpose of a physical inventory is to provide an accurate count of the products, which is crucial for maintaining proper stock levels, financial accounting, and for identifying any discrepancies due to theft, loss, or administrative errors.