Stocks and Flows in Accounting
Thus, a stock refers to the value of an asset at a balance date (or point in time), while a flow refers to the total value of transactions (sales or purchases, incomes or expenditures) during an accounting period. If the flow value of an economic activity is divided by the average stock value during an accounting period, we obtain a measure of the number of turnovers (or rotations) of a stock in that accounting period. Some accounting entries are normally always represented as a flow (e.g. profit or income), while others may be represented both as a stock or as a flow (e.g. capital).
A person or country might have stocks of money, financial assets, liabilities, wealth, real means of production, capital, inventories, and human capital (or labor power). Flow magnitudes include income, spending, saving, debt repayment, fixed investment, inventory investment, and labor utilization.
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Famous quotes containing the words stocks and, stocks, flows and/or accounting:
“In that sweet mood when pleasure loves to pay
Tribute to ease; and, of its joy secure,
The heart luxuriates with indifferent things,
Wasting its kindliness on stocks and stones,
And on the vacant air.”
—William Wordsworth (1770–1850)
“Some spring the white man came, built him a house, and made a clearing here, letting in the sun, dried up a farm, piled up the old gray stones in fences, cut down the pines around his dwelling, planted orchard seeds brought from the old country, and persuaded the civil apple-tree to blossom next to the wild pine and the juniper, shedding its perfume in the wilderness. Their old stocks still remain.”
—Henry David Thoreau (1817–1862)
“The blood of Abraham, God’s father of the chosen, still flows in the veins of Arab, Jew, and Christian, and too much of it has been spilled in grasping for the inheritance of the revered patriarch in the Middle East. The spilled blood in the Holy Land still cries out to God—an anguished cry for peace.”
—Jimmy Carter (James Earl Carter, Jr.)
“At the crash of economic collapse of which the rumblings can already be heard, the sleeping soldiers of the proletariat will awake as at the fanfare of the Last Judgment and the corpses of the victims of the struggle will arise and demand an accounting from those who are loaded down with curses.”
—Karl Liebknecht (1871–1919)