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)
“Or else I thought her supernatural;
As though a sterner eye looked through her eye
On this foul world in its decline and fall,
On gangling stocks grown great, great stocks run dry,
Ancestral pearls all pitched into a sty,
Heroic reverie mocked by clown and knave....”
—William Butler Yeats (1865–1939)
“The point of the dragonfly’s terrible lip, the giant water bug, birdsong, or the beautiful dazzle and flash of sunlighted minnows, is not that it all fits together like clockwork--for it doesn’t ... but that it all flows so freely wild, like the creek, that it all surges in such a free, finged tangle. Freedom is the world’s water and weather, the world’s nourishment freely given, its soil and sap: and the creator loves pizzazz.”
—Annie Dillard (b. 1945)
“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)