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 truth is the river flows into the canyon
Of Ceasing-to-Question-What-Doesn’t-Concern-Us,
As sooner or later we have to cease somewhere.”
—Robert Frost (1874–1963)
“I, who am king of the matter I treat, and who owe an accounting for it to no one, do not for all that believe myself in all I write. I often hazard sallies of my mind which I mistrust.”
—Michel de Montaigne (1533–1592)