Oxford, Cambridge and RSA (OCR) GCSE Computer Science Practice Exam

The binary system is the correct answer because it is the foundational way computers store and process data using sequences of 1's and 0's. Each digit in this system, referred to as a 'bit', represents a power of two, and combinations of these bits can represent various forms of data, such as numbers, characters, and instructions.

In contrast, the hexadecimal system is a base-16 numbering system that uses digits 0-9 and letters A-F, making it a more compact representation of binary data but not the fundamental method of storage. ASCII, or the American Standard Code for Information Interchange, is a character encoding standard that represents text in computers, but it relies on binary representations for those characters. Lastly, the decimal system, which is base-10, is commonly used for everyday counting and arithmetic by humans but is not how data is stored at the binary level in computers.