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:
“We Americans have the chance to become someday a nation in which all radical stocks and classes can exist in their own selfhoods, but meet on a basis of respect and equality and live together, socially, economically, and politically. We can become a dynamic equilibrium, a harmony of many different elements, in which the whole will be greater than all its parts and greater than any society the world has seen before. It can still happen.”
—Shirley Chisholm (b. 1924)
“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)
“A saint is good who wanders constantly.
Water is good which flows continuously.”
—Punjabi proverb, trans. by Gurinder Singh Mann.
“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)