Physical Inventory: It can precisely refer to two separate however related ideas, and the meaning is mainly tied to whether the word is being employed to refer to a thing or to a procedure of doing something. The physical inventory can frequently refer to the on-hand inventory of products found in a store, usually a retail establishment, and might also be termed to as real inventory or “on hands.” Physical inventory can too refer to the process by which the inventory in a store is counted to set up the quantitative value of inventory itself.